The advantages of 100% mortgages


A 100% mortgage means that you will not have to pay a deposit. The lender will give you the full value that you need to buy the property.

This type of mortgage is great for anyone who cannot afford to save up for a deposit as they will be able to get on the property market more easily. It can be difficult, especially in this current economic climate, to put away some money each month. Even if you do have savings, you will need money to pay for the move, to pay the solicitor, the removals company and things like that and so finding a significant chunk for the deposit can be very difficult.

100% mortgages are not that common, most companies do ask for a deposit, but there are a selection on offer, which means that there is the opportunity to compare them and find out which one will be the best for you.

The mortgages were set up to help first time buyers as anyone who has an existing mortgage and is moving house, is likely to have some collateral in the house that will be used instead of a deposit. The 100% mortgages do sometimes often ask for a guarantor, which means that the borrower will nominate someone who will be able to cover repayments if the borrower cannot. This is often a parent or grandparent. They do this because the lending risk is higher as the bank has no down payment on the loan or any collateral in the property.

With house prices being so expensive, even though they are dropping a bit, it is still very difficult to save up enough money for a deposit. Years ago deposit amounts were much smaller but these days trying to find 10% of the value of a property will mean putting away tens of thousands of pounds, which is a sum of money that can be very difficult for anyone to save up. With many people having not had pay rises for a while and prices going up all the time, it can seem impossible to save very much and therefore having the option of not paying a deposit can be a great opportunity.

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