100% Mortgage

Typically most lenders require you to have a 10% deposit before they will consider you for a mortgage. Over the last few years more and more lenders have been willing to grant a mortgage with a 5% deposit. Today there are many lenders who are willing to allow people to borrow the full value of the property on their mortgages.

A 100% mortgage is usually granted to first time buyers and their attraction is obvious. With house prices increasing, the amount of money you need to make a 10% deposit is also constantly increasing. In many cases the amount required for a deposit is increasing faster than people can save. Therefore a 100% mortgage gives you a chance to break out of this spiral.

Click here for a list of companies offering 100% mortgages.

This type of mortgage is also useful if you cannot afford to buy a house at the moment but you have other debts, as you can use it to consolidate your debts by releasing the equity in your current home. The mortgage rate may be a little higher than for a 90% mortgage, but it will almost certainly be lower than the cost of short-term loans or credit cards.

However, even though 100% mortgages have advantages, there is also a downside.

The first of these is that you run the risk of going into negative equity immediately even if house prices were to fall a little. Negative equity is a major problem if you then find it difficult to meet repayments because if you have to sell your house the value will not cover your mortgage. Do your research and make sure that the house you are looking to buy is not in an area that is likely to suffer a downturn in prices. Check if the area had huge rises in the value of the housing stock over the last few years for example – at some time huge price rises have to cool.

However if you are looking at your house as long-term investment and if you are able to meet the repayments then 100% mortgages are an option worth considering, and can be invaluable in helping you to get your foot on the first run of the property ladder by removing the need for a substantial deposit to be made.

Complete our free secure application form if you would like one of our qualified, independent financial advisors to do the hard work for you and find you the best 100% mortgage deal.