100% mortgages are making a comeback!
For many people, buying a house is one of the biggest dreams of their lives. However, saving for a deposit, typically between 5% -20% of the purchase price, whilst paying a significant amount of monthly rent can be a challenge. This is where 100% mortgages come into the picture.
Skipton Building Society has recently launched a 100% mortgage product, targeting renters who are looking to step onto the property ladder but who can't afford to save enough for a mortgage deposit.
The new 5-year fixed-rate mortgage does not require a guarantor and has a maximum loan size of £600k.
There are some criteria which must be met in order to qualify for this product
- You must be a First-time buyer aged 21 or over
- Currently renting and able to prove that all rent and household bills have been paid on time for a period of 12 months in a row within the previous 18 months.
- You must have no missed payments on debts or credit commitments and your mortgage payment cannot be higher than present rental payment.
- This product is not available on new build flats.
There are certain risks such as if the property value drops, the borrower could end up owing more than the property is worth. This is known as negative equity and can be a significant problem if the borrower needs to sell the property. And the mortgage interest rates may be slightly higher than for those using a deposit. It is important to do your research and compare different lenders to find the best deal and it is also important to make sure that you can afford the monthly payments, as with any mortgage. This is where we as mortgage experts can help.
If you would like to find out if this product would be suitable for your own individual mortgage requirements, then please get in touch to book an appointment and we will be happy to look at it in more detail for you.
17/05/2023 *The information contained within this guide was correct at the time of publication but is subject to change.
**Your home may be repossessed if you do not keep up repayments on your mortgage. **