It’s Back 100% mortgages couldn’t stay way for long - September 2011 sees the some
of the first lenders offer 100% mortgages (STS) - see terms ... Normally borrowers
traditionally saved up a deposit before they would be approved for a mortgage. This
gave lenders security; if the borrower defaulted on repayments and the property had
to be repossessed then the bank was likely to get all the money it lent back.
100% Mortgages meant there was no need for buyers to save up a deposit before getting
on the first rung of the housing ladder so they became very popular with first-time
buyers struggling to save money.
However, 100% mortgages were generally more expensive than mortgages where the borrower
needed a deposit, and in some cases the borrower also had to pay for a mortgage indemnity
guarantee (MIG), a form of insurance which benefited the lender if the house purchaser
defaulted on the mortgage.
In June 2007, there were over 100% mortgage products on the market, and 136 products with a loan-to-value ratio of over 100%, according to data from Moneyfacts.co.uk. Today there are eight 100% mortgage products on the market, and as of September 6th 2011 only one is available in the UK mainland – It’s Back from Aldermore - a new finance company set up in 2009. The rules and guidelines of the 100% mortgage deal will be added shortly - we are sure that it will include a guarantee from family members properties of up to 25%.
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•Best Mortgages - What’s the best out there today ... read more ..
•The comeback of 100% Mortgages - are they easy to get? What are the rules and regulations surrounding these new deals ... read more ..
During the boom Northern Rock, Coventry Building Society and Birmingham Midshires all offered “100% plus” mortgages.
These mortgages were always risky as borrowers were effectively in negative equity from day one– where the mortgage owed is more than the property’s value – from day one. This as we all know it started the sliding effect on the UK mortgage industry ... And the start of the sliding house price crash that effected the UK, Europe and USA.
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During the house price boom many of the larger mortgage providers even offered mortgages up to 125% of the value of a property.
This meant the house buyer had cash to pay for the extra costs involved with purchasing a house such as the legal, solicitors and house valuation fees.
It also allowed them to furnish their home without ever having built-up savings.