100% Mortgage

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Mortgage Fox – Smart, independent, unbiased advice on UK mortgages and home buying.

100% mortgage is when you borrow the full amount of your mortgage..
In other words you don't have to save a deposit.
Possible problems are:-

• You will probably be charged a higher interest rate.
• If property prices fall you could end up in negative equity.( see below)
• You may have to pay a higher lending charge.( see later)

You may have to shop around for a 100% mortgage but our Mortgage Advisors will assist you with this.

100% mortgages are usually but not always aimed at first time buyers as the deposit is a huge problem for them.
Some mortgages on offer can even lend above the value of the property by offering additional funds on an unsecured basis, but at the same rate of interest as the mortgage on the property. This can be very useful as you could add the  cost of your solicitor, stamp duty, land registry, and valuation fee to your loan. Alternatively if you wished to borrow additional cash to help furnish the new property, then funds could be raised for that as well.
You must be aware that you may have to pay an above average interest rate. . Another factor to cause the interest rate to be higher is the lack of competition in the market, with only a few lenders offering 100% mortgages.
The following is an example of a calculation of the maximum that could be borrowed for a 100% mortgage.:
A Maximum Income Multiplier ( this depends on credit score and your level of income) of 5.4 x the first salary  + 1 x the second salary or 4.1 x your joint salary less an amount for any existing commitments.
eg:- Child Maintenance , Hire Purchase and Personal Loans are taken into account.
Overdrafts, credit and store cards are not taken into account. 
Extra income such as car allowance and maintenance payments should be added to your income.
To find out more about this consult our Mortgage Advisors.

Negative Equity.

The term negative equity is used to describe a property where the mortgage is higher than the value of the property.
Taking a mortgage with no deposit carries some risks Property prices may fall..  This will  alter the loan to value on your property putting you into negative equity. 
This will not have an immediate impact,but if you decide to sell your property and the value has gone down, you will still owe any difference between the outstanding mortgage balance and the sale amount.

The Higher Lending Charge

As well as having to pay a higher interest rate, you may also have to pay a bigger Higher Lending Charge (HLC) than if you put down a deposit towards the purchase price. The Higher Lending Charge is paid by you, but insures the lender against you defaulting on your mortgage. It does not benefit you at all..

 This can however be added to your loan.
This does mean that you will be paying interest on the HLC for many years.
Not all lenders make a Higher lending Charge. Our advisors will assist with this.

If you are opting for 100% mortgage, you should look at fixed or capped interest rate mortgages, since these help to protect against rising interest rates.
Pros of 100% Mortgages
No deposit required-  Extra assistance with additional costs may be offered.
Cons of 100% morgtages
Higher Interest Rates – Possible Higher Lending Charge- Negative Equity – Lack of choice.
If you wish to find out more about 100% mortgages please complete our Mortgage Quote form.
Our Mortgage Advisor will provide details of the best mortgage to suit your needs.