100% Mortgages

Some lenders will consider giving those who do not have a deposit when purchasing a property 100% Mortgages. In other words they will give you a loan for the full purchase price of the property.

100% mortgages are few and far between, especially in the current economic climate, and the lender will almost certainly charge a higher rate of interest as the risks involved are greater. On top of this, you will generally be charged a mortgage indemnity premium which adds to the overall cost of the mortgage. Buyers may also incur a higher lending charge, or HLC. This is generally added to the mortgage if you are unable to pay it up front. But beware, the interest payable on this ‘add on’ will mount up over time.

Lenders will most like be reluctant to give out 100% mortgages in times of economic downturn as the risk of property values dropping lower than the loan, negative equity, are vastly increased. In most cases those wishing to obtain a 100 percent mortgage may well need to have a good credit background in order for the lender to minimise the risks involved.

Apart from buy to let mortgages, most types of mortgage deal are available when applying for a 100% mortgage. These include the standard fixed rate, variable rate, discounted rate and capped rate types of mortgage.

100% mortgages are a way forward for those purchasers without the funds to put down a deposit. However, it is best to seek the advice of a mortgage advisor before agreeing to this type of loan as the costs can mount up over time.