Why are you looking for a mortgage?
Repayment mortgage of £280,000 over 25 years, representative APRC 5.3%. Repayments: 24 months of £1,379.32 at 3.35% (discount), then 276 months of £1,709.28 at 5.59% (variable). Total amount payable £504,864.96 which includes interest of £224,864.96. Early repayment charges apply. Fees are assumed to be paid upfront. Other fees may apply.
Eligibility
You must meet the following criteria in order to get this loan:
Are resident of England
Are resident of Wales
Are older than 18 years
Available Direct.
Max age at term end: 80 years
Additional criteria may apply.
Repayment mortgage of £280,000 over 25 years, representative APRC 5.1%. Repayments: 36 months of £1,400.24 at 3.49% (fixed), then 264 months of £1,699.04 at 5.59% (variable). Total amount payable £498,955.20 which includes interest of £218,955.20. Early repayment charges apply. Fees are assumed to be paid upfront. Other fees may apply.
Eligibility
You must meet the following criteria in order to get this loan:
Are resident of England
Are resident of Wales
Are older than 18 years
Available Direct.
Max age at term end: 80 years
Additional criteria may apply.
Repayment mortgage of £280,000 over 25 years, representative APRC 5.2%. Repayments: 36 months of £1,439.57 at 3.75% (fixed), then 264 months of £1,703.83 at 5.59% (variable). Total amount payable £502,334.64 which includes interest of £221,635.64. Completion Fee (£699) with an option to add to the loan. Early repayment charges apply. Fees are assumed to be paid upfront. Other fees may apply.
Eligibility
You must meet the following criteria in order to get this loan:
Are resident of England
Are resident of Wales
Are older than 18 years
Available Direct.
Max age at term end: 80 years
Additional criteria may apply.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
A 100% loan to value (LTV) mortgage is one of the most controversial types of mortgage available, not to mention one of the most difficult to be approved for. It’s known as a no deposit mortgage, because a 100% mortgage means having to borrow the entire value of the property you want to purchase. But how do they work and what should you be aware of?
These types of mortgages are for when the borrower cannot put down a deposit but can afford the monthly repayments.
For example mortgage lending is based on how much the lender can afford to lend you at a given rate. If you earn £30,000 a year, a lender will usually be able to lend you four times that – £120,000.
If you had £21,000 saved, for example, you would be able to add that to the total you can borrow to get a property. So in this example, a £140,000 house with £119,000 of borrowing is an 85% LTV, as the ratio of borrowing to house value is 85%.
But what if you are buying a house with no deposit? What if you want to borrow the full 100%? That’s what a 100% LTV mortgage is for.
As 100% mortgages are high-risk they are often limited, normally to existing borrowers, or in some cases they are released in only a limited amount to help restrict the overall risk the lender is taking on.
In most cases, 100% LTV mortgages may be available only if you have a guarantor – namely someone willing to take on the risk associated with the mortgage.
This means that they will take responsibility if you fail to keep up your payments, but in some circumstances this could lead to them having their home repossessed.
Very few lenders now offer no deposit mortgages. But before the financial crisis of 2008 100% mortgages were more common, in fact loan to value mortgages of 110% and even higher were common as lenders offered borrowers deals that allowed them to consolidate credit card and loans with a mortgage. Since 2014 stricter lending criteria has meant lenders now take a more cautious approach when approving mortgages.
Unlike a typical mortgage, a 100% LTV requires no up-front deposit. While this is fantastic for those with no savings looking to get on the property ladder, it does typically mean the lender will charge a higher level of interest to compensate for the additional risk.
Therefore, if you do have a deposit, you are more likely to get a cheaper mortgage overall by putting forward some money and going for a lower LTV mortgage.
Even if you have a guarantor you could still be turned down for a 100% ltv mortgage. Mortgage lenders carry out comprehensive checks, known as affordability checks, and these may throw up issues such as a poor credit rating.
A guarantor mortgage is when a family member or friend agrees to guarantee the mortgage on behalf of a borrower. Quite often 100% mortgages are ‘guarantor mortgages’. The guarantor provides the security so they are responsible for paying the mortgage if the borrower cannot pay it. When choosing a guarantor, you need to make sure they are aware of the risks involved, they should probably get legal advice before signing any documents.
Because you have borrowed 100% of the value of the property, a fall in the value of the property will mean you suddenly owe more than it is worth. This is called negative equity.
House prices generally rise over the long term, but until prices pick up again you will find it hard to move, because the money you’ll receive from the buyer won’t cover the mortgage costs you need to pay back to your lender.
And the lender is taking a risk, because in the unfortunate situation of needing to repossess your property, it will be seizing an asset that is worth less than the outstanding loan.
You will have to have to prove you can afford the monthly repayments even if you have a guarantor in place. First time buyers who apply for 100% mortgages will also need to have a very good credit rating.
Allow borrowers to get on the property ladder
Can allow family members to help via guarantor mortgages
The interest rate is higher
They come with more risk - such as negative equity
You will have no equity (share) in the property until you start to make repayments
Consider trying to save for a small deposit. The UK Government has a mortgage guarantee scheme which allows borrowers with a deposit of just 5% to apply for a mortgage. Other ways of getting on the property ladder include:
These mortgages allow family members to help their relatives by putting a deposit into a savings account run by the lender. The savings have to stay in the account while the mortgage is being paid off. The idea is that the savings can be used if the borrower fails to make a repayment. The savings do earn interest, however they need to stay in the account, until the borrower has paid off, or switched the mortgage. You can also get family mortgages where the money is used to offset part of the interest on the mortgage, but with these types of mortgage no interest is paid on the savings.
This scheme was announced at the 2021 Budget and was launched in April 2021. Lenders taking part in the scheme are able to offer 5% deposit mortgages which are government backed. The scheme will last until 31 December 2022.
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