100 % Mortgage 
 

A 100% Mortgage is where you require a loan for the full price of the property. This is often the case for first time buyers who have no deposit. A limited number of lenders offer 100% mortgages and those that do will tend to charge a higher rate of interest reflecting the risk. As well as paying more in interest you can also expect to pay a MIG (Mortgage Indemnity Guarantee) premium which can often be added to the mortgage.

 

100% mortgages, sometimes referred to as a no deposit mortgage, allow you to be able to borrow against the full value of the property. This would mean that with a 100% mortgage, no deposit is required. This is comparatively a higher risk loan for a mortgage lender, so there are normally higher rates of interest rates charged and often a compulsory payment of a mortgage indemnity premium. Often 100% mortgages require a good credit background for the applicant. However, there are lenders who can provide 100% mortgages for poor credit applicants even with ccjs.

100% mortgages come in many different formats including fixed rate, discounted rate, capped or variable rate. 100 percent buy to let mortgages are not available, a deposit is usually required although it is sometimes possible to remortgage your own property to create this equity.

Apart from charging higher interest rates for 100 percent mortgages the other risk for a lender is negative equity. As no equity is placed within the property value, because there is no deposit, if house prices instantly decrease after the property is bought then no equity exists as a buffer. This means that if you need to sell your home the 100% mortgage taken out on the original value of the property would outweigh the property new value.

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