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UK 100% Mortgage
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100% Mortgage

Mortgages no deposit down

What is a 100% mortgage?

A 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 below)
      You may have to shop around for a 100% mortgage as they are becoming scarse
  •  

    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 with a 100% mortgage. 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 nowadays.

     

    Borrowing as a couple

    The majority of applicants for 100% mortgages are young first time buyers who have not had the opportunity to save a deposit. The following is an rough example ofhow the maximum amount that a couplecould borrowed for a 100% mortgage is caluculated:

     

    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 if you qualify for a 100% mortgage please spend a few minutes and use our online mortgage quote form. The service is 100% free and we will also answer any question you may have.

     

     

    Negative Equity

    Your house is worth less than your mortgage

    The term negative equity is used to describe a property where the mortgage value is higher than the value of the property.

     

    Taking a mortgage with no deposit carries some risks. If property prices fall this alters 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

    Also know as the mortgage indemnity guarantee

    As well as having to pay a higher interest rate, you may also have to pay a Higher Lending Charge (HLC) than if you put down a deposit towards the purchase price.

     

    The Higher Lending Charge or Mortgage Indemnity Guarantee (MIG), is paid by you, but insures the lender against you defaulting on your mortgage. It does not benefit you at all, and the fee may be insisted on by the lender at the start of the loan.

     

    HLC fees are charged at up to 8% of the amount of the mortgage being advanced over the threshold. So, for example a 100% loan of £200,000 with an HLC threshold of 75% might have an HLC premium of £4,000 (£50,000 x 8%).

     

    Such premiums may be paid as a 'one off' or added to the mortgage advance. It 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.

     

    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% Mortgages

     

    • Higher Interest Rates
      Possible Higher Lending Charge
      Negative Equity

      Lack of choice

  •  

     

    Finding the best deal

    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.

     

    If you would like help finding the cheapest 100% mortgage deal Mortgagefox can scan the market for you and find a product that saves you money. If you want to discuss your mortgage options with an independent mortgage advisor then we can also do this.

     

    Click a link below:


    There is no obligation with any of these services, and both are offered completely free.

     

     

    Value of Property  
    £
    (eg 135000) 
    Value of Mortgage
    £
    (eg 85000) 
    Type of Mortgage