100% Mortgage Guide

100% Mortgages Explained

In the past, mortgage lenders usually insisted upon a deposit of some level before lending on a property. In recent years lenders have developed a wide range of 100% mortgages for homebuyers, especially first time buyers, without the requirement to put down a deposit or leave spare equity. 100% mortgages are very popular in a rising property market.

As the name implies, a 100% mortgage provides the full purchase price for those who do not have a deposit or who would prefer to use their savings to do up there new home. In some cases, your mortgage lender can even provide a 125% mortgage, giving you some extra money to spend on your new home after you buy it.

100 mortgages are not suitable for everybody's needs, in a falling property market you may end up owing more than your house is worth, i.e. a "Negative Equity Situation", and you should obtain professional advice before deciding on which type of mortgage is most suitable for your needs

It's quite likely that you will have to pay the 100% mortgage lender a higher lending charge at the outset. This is a one off charge paid to protect the mortgage lender, not you, from the risk involved in lending you the full property value, not all 100% mortgage lenders charge this

When you buy a house with a 100 mortgage you are close to negative equity, a term meaning that you owe more than the property is worth - which could occur if house prices took a downturn. Negative equity can result in you being unable to sell or remortgage your home and if you are unable to maintain the payments could mean losing your home and having a residual debt after it is sold off.

100 mortgages provide a viable means of buying a home - and for many borrowers are the only real option of doing so - and there are some credible deals to be found on the market.

A broker can not only seek out those hard to find deals, but if you are in any doubt about whether a 100% mortgage is for you, or about the details of a specific deal, then a mortgage broker can advise you.

A 100% mortgage is where the mortgage lender allows you to borrow the full amount that the property costs, so if the purchase price is £150,000 you can borrow £150,000.

With most mortgages, the lender may expect you to put down a deposit from your own savings, which is typically 10% of the purchase price. With a 100 mortgage, the lender agrees to finance the whole of the purchase price, but will often charge a higher rate of interest and may make other conditions. The lender will also have the property valued to ensure that it is worth the price you are intending to pay and the amount they are going to lend.

If you are looking for a 100% mortgage and are borrowing for the first time, moving home, or even transferring your mortgage, 100 mortgage funding can be an attractive option.

Some of the Lenders 100% mortgages

Northern rock 100% mortgage explained

Together is more than just a flexible 100% mortgage.
It gives you the money to buy your home as well as a cash reserve to give you money for the things you want from your 100 mortgage.
A 100% mortgage all at the same interest rate.
It's ideal for first time buyers and it's flexible, so it changes as your life changes.

A together mortgage adapts to your needs.

From helping you onto the housing ladder to moving to a bigger place, extending your home and providing extra cash when you need it. Or simply switching your mortgage from another lender, to take advantage of together's features.

How together mortgages work.

Together is different to a normal mortgage. It works by combining your secured mortgage with an unsecured loan at a single interest rate with one combined monthly payment. This combination can be worth up to 125% of your home's value. Up to 95% of the value of your home is a secured mortgage. The remainder is an unsecured loan of up to £30,000 which is at the same interest rate as the secured mortgage.

An example

£125, 000 Cash reserve

£100, 000 Value of your home

£ 95, 000 Loan to buy your home

Say the value of your property is £100,000. You could get a secured mortgage of up to £95,000. And have the facility to borrow up to £30,000 unsecured loan for anything else.

You can draw on this £30,000 as it suits you. So, you might need £10,000 now and hold £20,000 in reserve.

Once you've applied for the amount of money you require (minimum £1,000) in your unsecured loan, you can choose to draw down any amount (£500 and over) as and when you need it.

You only pay interest on the part of the loan you've actually used.

Once your unsecured loan is set up, all it takes is one phone call to request an amount of money, which will be transferred to your bank account within three to four working days.

You can use the unsecured loan part of together for any legal purpose.

Coventry 100% mortgage know as a MOREgage

MOREgage is designed to help give you a boost on the housing ladder by combining a normal mortgage with a personal loan at the same great rate. And you can decide what to use the loan part of MOREgage for; paying your deposit, solicitors fees, moving costs, just furnishing your new home - whatever your need!

How it works

It's simple. MOREgage works just like a normal home loan, but it's in two parts.

The MOREgage

You can borrow up to 95% of the value of your future home subject to terms and conditions.

The MORE

The lender will also lend you up to £25,000 as an unsecured personal loan at the same great rate.

They've designed the scheme to bring the first or next step of the property ladder within reach -

• An arrangement fee may be applicable
• No higher lending charge
• Valuation - one free valuation to max £650.00
• Booking fee - £199.00

MOREgage also gives you flexibility - you can overpay up to 10% of the mortgage per year without an early repayment charge. And with interest calculated daily any over-payments you make will reduce your 100 mortgage straightaway.

Natwest 100% mortgage

You don't have to pay a deposit, plus you:

• can apply for a 100% mortgage of up to £250,000 (Offset up to £175,000)
• can change to another mortgage if your loan-to-value falls below 95%
• can choose to pay off capital and interest, interest only, or a combination of both

Early repayment charge applies. A higher lending charge applies to most loans above 90%.

Please note: if you borrow over 90% of the value of your house, you may be charged a Higher Lending Charge (HLC). This charge reflects the increased risk to the lender when the loan is a large percentage of the value of the property. You can choose to add any HLC to your mortgage, increasing the overall amount payable.