Could the Government have the answer to 100% mortgages

The Government are about the unviel their plans to help first-time buyers avoid 100% mortgages and get their foot on the property ladder.

According to a report published today, thousands of first-time buyers are at risk from negative equity following the huge rise in the number of 100% mortgages available, so the Government is considering introducing more shared ownership mortgages run through housing associations.

Although, 100% mortgages allow first-time buyers to get on the housing ladder, without laying down a deposit, it does however mean that they are borrowing the full value of their property and in some cases more than the property is worth, leaving them with negative equity. From January 2006 and August 2007, over 33,000 took out 100% mortgages, but they could now be paying the price with house prices set to drop and house repossessions bound to rise.

Shared ownership allows first-time buyers to purchase a percentage of their property whilst paying rent on the rest, therefore avoiding taking out such a high mortgage. There will be a range of properties available including new build and re-sale properties, but you will have to meet eligibility requirements relating to your credit rating and income.