100% Mortgages and 90% Mortgages
Hot Topics
- What Will The Initial Costs Of Buying A House Be?
- Before you actually move into your new property – you will have to pay a series of initial costs to cover the following:
- What Is A Mortgage Indemnity Guarantee (MIG) And Will I Have To Pay It?
- The Mortgage Indemnity Guarantee is also known as a Mortgage Indemnity Premium or High Lending Fee. It protects the lender against the risk of you defaulting on your mortgage debt.
- Do I Need a Guarantor?
- If your lender is concerned about your ability to meet your mortgage commitments, they may ask you to provide a Guarantor.
- What Happens If I Have No Proof Of Income?
- If you are self-employed and cannot provide any proof of income – you will have to self-certify your income. In most cases you will need to provide an accountant’s certificate as proof of income.
- What Are ISA Mortgages?
- If you take out an intrest only mortgage your lender will expect you to put in place a ‘financial vehicle’ capable of repaying your mortgage at the end of the mortgage term.
Most mortgage lenders will only offer a 90% loan to value, that means that they will only loan you 90% of the properties value. First time buyers find this particularly problematic because they need to save up there 10% of the properties value before they can complete on their mortgage.
So if you're a first time buyer and you haven't got your full 10% depoit money together, what can you do?
Well we hope you've got supportive parents because 80% of first time buyers now rely to some extent on money provided by parents. This is a huge jump from just two years ago when just 40% of parents chipped in.
The balance of the deposit is often raised through a bank loan. If you're tempten to do this, please do your sums carefully and don't over extend yourself financially. It's better to wait another year rather than end up with severe money problems and a bad credit record.
Negative equity
Negative equity is when the value of your home is less than the value of the outstanding borrowing on your mortgage. 100% mortgages are particularly in danger because if house prices fell you would immediately fall into negative equity. Mortgages with a lower loan to value have a smaller chance of falling into negative equity because you have only borrowed some of the properties value.
High Interest Rate
In order to secure even a 90% mortgage you may have to pay an above-average interest rate. With 90% mortgages the lender is at much greater risk of losing their money in the event of a house prices crash, by offering a higher interest rate the lender can protect themselves against the increased risk.
Mortgage Indemnity Guarantee
A mortgage indemnity guarantee is an insurance policy which insures the lender against the properties loss of value. Mortgage Indemnity Guarantees can add several thousands of pounds to your mortgage loan.
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