New 100% Mortgage Launched for Buyers with No Deposit: Who Can Get It?
A new mortgage product has hit the market, offering buyers the chance to purchase a home without a deposit.
This could be a game-changer for those struggling to save while paying rent. But is it the right move for you?
Who Can Get It?
The 100% mortgage is available to UK residents with a minimum household income of £24,000. Borrowers must meet affordability checks and commit to a fixed-term mortgage of either 10 or 15 years.
What is the Interest Rate on a 100% Mortgage?
The interest rate starts at 5.99% and automatically decreases as the loan-to-value ratio improves. This means that as you pay down your mortgage, your rate will gradually reduce.
What Are the Alternatives?
Low-Deposit Mortgages: Some lenders offer 95% or 99% mortgages, requiring only a small deposit.
Government Schemes: Help to Buy and Shared Ownership schemes can assist first-time buyers.
Guarantor Mortgages: A family member can act as a guarantor to help secure a better deal.
Is It a Good Idea?
While a 100% mortgage removes the need for upfront savings, it comes with risks. If property prices fall, borrowers could end up in negative equity, meaning they owe more than their home is worth.
Additionally, interest rates on these mortgages tend to be higher than those requiring a deposit.
Before committing, buyers should carefully assess their financial situation and consider whether waiting to save a deposit might be a better long-term strategy.