Are 100% Mortgages Dead?

Explanation of 100% mortgages.

What are 100% Mortgages?

100% Mortgages, now a preserve of the past, were a mortgage (homeloan) for 100% of the value of the property being ‘Mortgaged‘. The interest rates for these types of mortgages are usually higher, due to the increased risk the lender takes because of the lack of deposit, and high loan amount.

Mortgage providers also offered 125% Mortgages, to allow the buyer to, for instance, pay for valuations, legal fees or home furnishings.

In the year 2006, about 2 percent of mortgages were based on a 100% of value mortgage (src = Council Mortage Lenders).

What Happened to The 100% Mortgage?

The long and short of it is that the credit crunch ended the 100% Mortgages offers.

Due to the housing market seeing a slump between 2007 and 2008, home owners were left in what is commonly called “Negative Equity” - Meaning their mortgage debt is higher than the value of the property.

What are the alternatives?

In the present financial climate, many lenders would require a 10% deposit as a minimum. If you are looking for a mortgage, make sure you shop around for the best deal.

Be especially cautious of the terms and conditions of any mortgage, and take the time to go through the various terms and conditions before signing any financial agreements.