100% Mortgages or Mortgages with no deposit.
In this article we will look at your options for borrowing up to 100% loan to value, meaning no deposit. The available schemes vary across the mortgage market and after reading this guide you will be much wiser as to what your options are and where you fit in.
A Brief History of 100% Mortgages
Back in the early 2000s, 100% mortgages were very popular among first-time buyers. These mortgages allowed buyers to buy a house without putting down any deposit, which meant they could borrow the entire cost of the property. In fact, some lenders such as Northern Rock offered 125% mortgages. 95% secured and the remainder unsecured (like a personal loan).
When the global financial crisis hit in 2008, it caused a lot of chaos in the housing market. Many lenders had to repossess and often the stock value of the property was lower than the total debt.
Naturally lenders and regulators became more cautious, new rules were brought in by the FCA and 100% mortgages became harder if not impossible to come by. However, there are now lenders that are able to offer high loan-to-value mortgages from 95% to 100% loan-to-value. The risks are mitigated in various ways which we will explore.
Our Top 3 100% mortgages
1. One hundred percent mortgages – 99% of the way there.
The first option in our list is a 99% loan to value mortgage. You need at least a 1% deposit or £5,000
Who can apply?
∙ One or more applicants but at least one of the applicants MUST be a first-time buyer.
∙ Minimum of £5,000 deposit
∙ Must achieve a high credit score when credit scored by the lender
Criteria:
∙ Min loan £95,001
∙ Max loan £495,000
∙ Houses only, no flats and no new build houses
∙ Max age at end of term 70
∙ Max term 40 years
∙ Capital and interest repayments only
2. 100% mortgages for ‘renters’.
The second option is a product that rewards people who have rented a property for a period of time and now wish to get on the property ladder. This product can go up to 100% loan to value.
Who Can apply?
Anyone who has not owned a property in the last 3 years and who has been renting a property for at least 12 months within the last 18 months.
Criteria:
- Up to 100% LTV mortgage for current renters, who haven’t owned a property in the last 3 years and can demonstrate a track record of affordability of ALL monthly rent for a minimum of 12 months in the last 18-month period.
- The monthly mortgage payment of the proposed mortgage must be equal or lower than the average of the last 6 months rental cost – e.g. if the average rent over the last 6 months is £1200, the mortgage payment must be £1200 or lower.
- Maximum term of 35 years
- Max loan £600,000
- Maximum income multiple of 4.49 or 4.75 if income >£100k
- No new build flats
3. A little help from your family
Option 3 in our list is a product that requires a little help from your family. A family member is required to deposit 10% of the property value into a savings account with the lender. This is locked in for 5 years earning interest for the depositor.
The lender will then lend 100% loan to value to the mortgage applicant.
Who can apply?
Anyone can apply even if they are not a first-time buyer but you must currently not own any property.
Criteria:
∙ 4 x income or 4.49 x income if > £50,000
∙ Max loan £500,000
∙ Max term 35 years
High loan-to-value mortgage options.
New schemes are being introduced regularly so please do keep in touch and we can keep you updated as criteria change. If you do have a deposit, then the general market is asking for just a 5% deposit.
The deposit can come from savings, can be gifted or an incentive from a builder on a new build.
To discuss 100% mortgages or high loan-to-value mortgages with a member of the team here at Fox Davidson please do call in or complete the enquiry form. We look forward to working with you.
