100% Mortgages and 90% Mortgages
Hot Topics
- 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 Happens If Interest Rates Change?
- If you have some form of fixed interest rate mortgage you will be unaffected by changes in interest rates. Otherwise you can expect a change in the rate of interest charged on your mortgage.
- Right To Buy Mortgage
- What is ‘Right to Buy’?
- I Have Been Turned Down For A Loan Or Credit Card, Will I Still Be Able To Get A Mortgage?
- If you have been turned down for a credit card or loan, then you need to find out why your application was rejected before you apply for a mortgage.
- What Happens If I Have Bank Defaults?
- If you have failed to meet payments on a credit agreement such as secured loans, unsecured/personal loans, credit cards, store cards or car finances etc, or you have failed to comply with your lender’s requirements, you will be described as having 'defaulted'.
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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