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Jargon Buster

E-mail: Mortgage Arrangers

100% Mortgage

A 100% mortgage can sometimes be the only way of securing the property you want, when property prices are rising faster than you can save a deposit.

Traditionally 100% mortgage application involves very strict income checks and the applicant needs to obtain a relatively high credit score. Because of the risk to the lender in taking on board a borrower with no deposit, 100% mortgages are usually subject to a substantial "higher lending charge" ( previously known as a mortgage indemnity premium or MIG for short"). However, this is not always the case, and there are at least two lenders in the UK that do not apply a higher lending charge.

100% mortgages are usually taken by first time buyers, couples who have separated or those buyers that have other uses for their hard earned cash.

A relatively new type of mortgage has emerged to compete with the 100% mortgage lenders and this is the 125% mortgage. Applicants can borrow enough to buy the house, pay the solicitor, stamp duty, and still have enough to decorate or furnish.

Example: you see a house for £100,000 but have no deposit and need all your spare cash for other commitments. You are going to need a further £1,700 to pay solicitors fees and stamp duty, and you still have to furnish and decorate it. On top of this you have a loan that is working out a bit expensive because of the interest rate applied to it !

One possible solution provided by a high street lender : borrow 95% of the purchase price as a mortgage and another 30% as an unsecured loan, but at the same interest rate that is applied to the mortgage.

This is not "mortgage advice" but mortgage information. The above information was current at the time of publication, and is available on the lenders own web site.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

The 100% to 125% mortgage is flexible to allow overpayments without penalty
There is no higher lending charge to pay on some 100% mortgages
100% mortgages are available from the 3rd largest U.K. High St lender
Daily interest calculations are available on 100% mortgages
DECISION IN PRINCIPLE AVAILABLE IN MINUTES

On the negative side
The interest rate is usually higher than on sub 100% mortgages.
You will be borrowing more than the value of the property (a maximum of 95% as a mortgage, and a maximum of 30% (or £30,000 whichever is lower) as an unsecured loan.

CLICK HERE and send your details for a 100% mortgage quote to be e-mailed back to your computer for printing off - it's free.

E-mail: Mortgage Arrangers