100% Mortgage

100% Mortgage

In an increased effort to jump-start home mortgages more and more lenders are offering 100% loans. 100% loans are just that, the lender is willing to loan 100% with no deposit down. This makes it easier to first-time buyers, which is a requirement in many cases of a 100% mortgage. A first-time buyer is considered a buyer who has not owned a property previously. In the ever declining housing market lenders are hoping this will encourage first-time buyers to move ahead and purchase a property of their own.

 

First time buyers with a 100% mortgage may see a higher interest rate and other requirements must be met but it can be a good opportunity for a buyer without the means for a large deposit to purchase a home. First-time buyers must have a good credit score and be able to prove employment. If employed a letter from an employer is adequate if self-employed and the business is well established it’s a bit more complicated. Usually, three years worth of account audits and a letter from the business accountant are required. It also helps if the potential buyer has proof of let payments for approximately the same amount as the mortgage payment to show proof of ability to repay the mortgage loan.

 

Many lenders require that a relative guarantee payment for anything loaned above 75% for a property loan. The family member, which is typically a parent or grandparent, must show proof that they can repay the amount they are guaranteeing. Many first-time buyer mortgages are on a strict repayment basis. The guarantee normally expires after ten years, making the loan the buyer’s sole responsibility. A 100% mortgage could be a good solution for a first time buyer who little in the way of a deposit but wants to make the jump into property ownership.

 

A 100% mortgage could be a good solution for a first-time buyer who little in the way of a deposit but wants to make the jump into property ownership.

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