Still need a 100% mortgage
So you still need a 100% mortgage. What you need to be careful of is not overstretching yourself to far that you can’t afford to pay the bills. 100% mortgages are commonly used to help people get onto the housing ladder.
The obvious concern now is will you be able to afford the mortgage payments when you fixed rate comes to its end. Always consider a longer fixed period, this will hopefully give you time to adjust you finances to suit your commitments. 100% mortgages are still available and for someone with a long term plan and a well managed monthly budget they can still offer a way of purchasing your dream home.
100 % mortgages are a loan for the full purchase price of the property, lenders are not offering any more than this. 125% mortgages have all but dissappered for now.
100% mortgage choices are limited. Very few lenders offer 100 percent mortgages and the ones that do offer 100 percent mortgages have always charged a higher interest rate than they would for a mortgage covering a lower percentage of the purchase price. i.e. 97% or now more commonly 95% & 90%.
As well as having to pay a higher interest rate due to the risk taken by the lender, you may be charged a larger higher lending charge premium (also referred to as mortgage indemnity guarantee MIG) than if you put some of your own cash towards the purchase. However, to help with your initial upfront fees, most lenders will allow you to add the MIG to your 100% mortgage. You have to consider that you will be paying interest on the MIG for many years.
There are now some mortgage lenders that offer 100% mortgages without charging a mortgage indemnity guarantee premium. These 100 percent mortgage lenders also can lend higher than standard income multipliers they are generally 4 times your income, however their interest rates for these 100 percent mortgages are again higher than a 97 & 95% mortgage.
If you are borrowing the maximum 100% mortgage, you should consider a fixed or capped interest rate mortgages, since these buy valuable protection against the risk of rising mortgage interest rates.
