Are 100% mortgages available for first-time buyers?
Yes, but usually only if you've got a guarantor and even then, banks and building societies might say no.
You need to do your research carefully and may need to work with a broker to find a lender willing to consider you.
What else do I need to know if I’m thinking of getting a 100% mortgage?
There are some important things to understand if you're thinking of getting a 100% mortgage.
Not all lenders offer them. Most mortgage providers will only loan 95% of the property's value, which means you need a minimum 5% deposit. You may need to shop around and consider niche providers.
Lenders see 100% mortgages as risky. That's because you aren't putting any of your own money into the property.
You could get into negative equity with a 100% mortgage. Negative equity is when the value of your home drops to the point where the amount you borrowed is greater than the value of your home.
Interest rates on 100% mortgages are usually higher because they are seen as a bigger risk. This could make repayments very expensive and make it harder to meet affordability criteria.
100 percent mortgages aren't usually available for first-time buyers as this group is already considered high risk. Instead, you may need to save up for a deposit or seek help from your family.
Shop around – 100 percent mortgages usually aren’t the best deals so it’s more important than ever to find the best rate you can.
Can you get a mortgage with an LTV over 100%?
Generally, it’s next to impossible to get a mortgage with an LTV of more than 100%, although a very small number of lenders offer negative-equity mortgages.
If you've bought a house or flat that's fallen in value, you may find you’re in negative equity. This means that if you want to sell your current property, you'd have to pay the lender more to pay off your original mortgage loan than you receive from the buyer when you sell it.
Under these circumstances, you could try to negotiate with your lender to change your mortgage, or you could think about letting your house instead. The other option is to stay where you are and hope that the value of your home rises in time. In this case, you would continue to pay your mortgage instalments as normal.
