100% Mortgages and 90% Mortgages
Hot Topics
- Income Multiples Explained
- If you are an employee, the majority of mortgage lenders will calculate the maximum size of a mortgage loan based on your salary.
- Is There Any Way I Can Lower My Monthly Repayments Without Switching Mortgages?
- If you find that you cannot afford your monthly mortgage repayments and do not wish to switch your mortgage to another lender – then you will need to negotiate new terms with your existing lender.
- What Are Discounted Mortgages?
- Discounted rate mortgages take the lenders standard variable rate and apply a discount. By applying the discount it allows the borrower to reduce the interest rate on the loan for a set period of time.
- Base Rate Tracker Mortgage
- A base rate tracker mortgage tracks the Bank Of England’s base interest rate then adds on a additional figure to arrive at the borrowers variable rate. Your monthly mortgage interest payments go up when the base rate goes up and they go down when the base rate goes down. The base rate tracker interest rate is usually between 0.5% and 1.0% above the Bank Of England's Base Rate.
- 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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