Allow me to reintroduce myself - the 100% mortgage

Not since the sub-prime taboo days of 2008 has a 100% mortgage been offered by a lender.

Since then, the closest the market’s come to it are the two 95% Help to Buy mortgage schemes, and one of them ends in December this year.

That’s why the news that the first 100% mortgage in eight years has arrived on the market, comes as good news. But will it help the right people? And is it truly a “100%” mortgage?

Well, there is a catch.

Whilst the buyers themselves may not need a deposit, a ‘helper’ of the buyer must put 10% of the purchase price into a savings account with that particular lender.

So this isn’t a 100% mortgage, it’s a 90% mortgage?

It may sound like that, but, no. Whilst the ‘helper’ will have to put the funds down, providing your entire mortgage payments are up-to-date, they will get these funds back with interest added on top after three years.

Why would the lender do this?

It helps everyone. The lender gets new mortgage customers, the buyers get their home and the ‘helpers’ receive interest on, what is effectively, a savings account.

However, on the not-so-good flipside, access to a 100% mortgage could also be seen as a lender’s ‘wager’ that house prices will increase by 10% within the next few years, as they are essentially guaranteeing that there will be enough equity in the property within three years to pay the ‘helpers’ back.

So, if your parents, or someone you’re close with, has any spare cash laying around, this could help you get onto the property ladder quicker than expected.

If you don’t have that luxury, this scheme could see yet another flood of buyers that could drive house prices up even further – putting that step onto the ladder even further out of reach.

Because of this dilemma, it is imperative that you speak to a professional mortgage adviser who will be able to assist you in finding a mortgage that is right for your needs and circumstances.

Jeremy Morcumb is from Mortgage Advice Bureau Swindon – for further information call: 01793 611400

Email: jeremy.morcumb@mab.org.uk or visit: mortgageadvicebureau/swindon.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed. (or insert your fee statement)

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