100 per cent mortgages were extremely popular before the UK credit crunch, when they were a niche product growing in popularity.
100 per cent mortgages were most favoured by first-time buyers who often struggle to get on the property ladder.
Even before the credit crunch in late 2007, the number of lenders offering 100 per cent mortgages remained low.
Update: The credit crunch of 2007/2008 had a major impact on 100 per cent mortgages and 100 per cent plus mortgages. With tighter lending criteria and tougher market conditions, many mortgage lenders have been forced to pull down their 100 per cent mortgage ranges.
100 per cent mortgages are therefore a relatively rare product on the mortgage market at this stage. Mortgage lenders generally require a deposit of at least 10 per cent of property value, and some are even more stringent.
As well as a limited number of 100 per cent mortgage loans on the market, those that are tend to cost slightly more than a standard mortgage. Most people put down a deposit on their mortgage loan to receive a certain rate of interest. 100 per cent mortgage loans generally charge a higher rate of interest.
As well as paying a higher interest rate for your 100 per cent loan, borrowers may also be charged higher lending charges (HLCs) if they do not put forward a deposit. Many lenders allow borrowers to add their HLC to their mortgage, and this is no different in the case of 100 per cent mortgages, but always remember that you will pay interest on the HLC for some time.
There are numerous 100 per cent mortgage lenders on the market, many of whom do not charge HLCs or mortgage indemnity guarantee premiums. Furthermore, some of these mortgage lenders will lend on higher than average income multipliers. In this instance, it is very likely that the lender will charge higher interest rates than on a standard mortgage loan.
There are numerous different mortgage loans on the market, although the safest are generally considered to be fixed or capped mortgages. That way, if interest rates rise, you are not faced with crippling repayments and no repayment vehicle.
For more information about 100 per cent mortgage loans and to get a 100 per cent mortgage loan quote, please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance. Alternatively, you can give us a call on .