100 per cent mortgages were extremely popular before the UK credit crunch, when they were a niche product growing in popularity.
100 per cent mortgages were most favoured by first-time buyers who often struggle to get on the property ladder.
Even before the credit crunch in late 2007, the number of lenders offering 100 per cent mortgages remained low.
Update: The credit crunch of 2007/2008 had a major impact on 100 per cent mortgages and 100 per cent plus mortgages. With tighter lending criteria and tougher market conditions, many mortgage lenders have been forced to pull down their 100 per cent mortgage ranges.
100 per cent mortgages are therefore a relatively rare product on the mortgage market at this stage. Mortgage lenders generally require a deposit of at least 10 per cent of property value, and some are even more stringent.
What are 100 per cent mortgages?
100 per cent mortgages are mortgage loans that offer 100 per cent of the purchase price of a house. They are available to borrowers who cannot afford a deposit.
Why doesn’t everyone opt for 100 per cent mortgages?
As well as a limited number of 100 per cent mortgage loans on the market, those that are tend to cost slightly more than a standard mortgage. Most people put down a deposit on their mortgage loanto receive a certain rate of interest. 100 per cent mortgage loans generally charge a higher rate of interest.
Do higher lending charges apply to 100 per cent mortgages?
As well as paying a higher interest rate for your 100 per cent loan, borrowers may also be charged higher lending charges (HLCs) if they do not put forward a deposit. Many lenders allow borrowers to add their HLC to their mortgage, and this is no different in the case of 100 per cent mortgages, but always remember that you will pay interest on the HLC for some time.
Are there many 100 per cent mortgage lenders?
There are numerous 100 per cent mortgage lenders on the market, many of whom do not charge HLCs or mortgage indemnity guarantee premiums. Furthermore, some of these mortgage lenderswill lend on higher than average income multipliers. In this instance, it is very likely that the lender will charge higher interest rates than on a standard mortgage loan.
What types of 100 per cent mortgage are available?
There are numerous different mortgage loans on the market, although the safest are generally considered to be fixed or capped mortgages. That way, if interest rates rise, you are not faced with crippling repayments and no repayment vehicle.
How should I go about getting a 100 per cent mortgage?
For more information about 100 per cent mortgage loans and to get a 100 per cent mortgage loan quote, please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance.