100% mortgages comeback? They never went away!
Million Plus Private Finance
Experts in securing bespoke ￡1m+ lending solutions for UK and global clients with complex finances
There's been some speculation in the media about 100% mortgages making a comeback. At Million Plus Private Finance , they never went away! We are experts at securing 100% mortgages as they can be a useful way of raising much needed funds. It's a method of securing finance that our high net worth clients utilise regularly.
But, at the opposite end of the scale, 100% mortgages can also be a handy way for first-time buyers to take their first step onto the property ladder. Read on for more details...
???? A 100% mortgage is a type of home loan in which the lender provides the full purchase price of the property, allowing the buyer to borrow the entire amount without needing to provide a deposit or a guarantor. For first-time buyers, who may not have sufficient savings to cover a typical deposit (usually ranging from 5% to 20% of the property value) 100% mortgages can be very helpful. Here's an overview of the advantages, top tips for securing one, and risks associated with 100% mortgages for first-time buyers. ??
? Advantages:
?? No deposit required: As a first-time buyer, you may struggle to save for a substantial deposit. With a 100% mortgage, you can buy a home without needing any upfront savings. ??
?? Faster home ownership: Since you don't need to save for a deposit, you can enter the property market sooner, which can be beneficial in a rising market. ??
?? Top tips for securing a 100% mortgage:
?? Improve your credit score: Lenders will assess your credit history when determining your eligibility for a 100% mortgage. A good credit score is essential for securing such a loan, so ensure you pay bills on time and reduce existing debts. ??
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?? Research lenders: Not all lenders offer 100% mortgages, so research the market to find those that do. Compare the terms, conditions, and interest rates of different lenders to find the best deal. As a specialist mortgage broker with relationships with over 300 lenders, Million Plus Private Finance can help you to find the best mortgage rate with the best mortgage lender. ??
?? Assess affordability: While a 100% mortgage may seem attractive, it's essential to ensure you can afford the monthly repayments. Prepare a budget, factoring in your income, expenses, and potential interest rate increases. ??
?? ?? Seek professional advice: Speak to a mortgage broker, like Million Plus Private Finance to help you navigate the application process and secure the best mortgage deal. ??
? Risks:
?? Negative equity: Since you are borrowing the full value of the property, any drop in property prices could result in negative equity, meaning the mortgage balance is higher than the property's market value. ??
?? Higher interest rates: 100% mortgages sometimes come with higher interest rates compared to mortgages with a deposit, making the monthly repayments more expensive. ??
?? Limited availability: Due to the higher risk associated with 100% mortgages, they are less common and may be harder to secure. ??
??? Repossession risk: If you fail to keep up with the mortgage repayments, there's a risk of losing your home as the lender can repossess the property. ??
?? In conclusion, while a 100% mortgage can provide an opportunity for first-time buyers to enter the property market without a deposit, it is essential to consider the potential risks and ensure you can afford the monthly repayments. Conduct thorough research and seek professional advice from a mortgage broker to help you make an informed decision. ????