100% Mortgage in 2016 – Mortgage without a deposit or savings | Buy a property without a deposit | 100% funded property purchase
100% mortgage products used to be the norm in the Nighties, that’s right you could buy a property without any deposit. Two main banks Bank of Scotland and The Royal Bank of Scotland were at loggerheads tripping over each other to offer mortgages without a deposit, however can 100% mortgages still be found? Read on to find out more…
VENDOR GIFTED DEPOSIT
This can provide a solution without a deposit from your own resources. The most common instance would be a landlord selling to an existing tenant and funding the deposit himself to get the property off his books. Depending on the Mortgage Lenders they may accept vendor deposits but are likely to limit the amount to 5% to 10%. The balance would need to be taken as a mortgage.
RIGHT TO BUY
A genuine 100% mortgage of the discounted purchase price. In fact in some instances you can borrow over 100% up to 80% of the open market value.
USE OF OTHER PROPERTIES
You can borrow on against an existing property to raise money for a deposit on a new property. This could be by way of a remortgage or second charge.
The near misses…
In addition the 100% mortgage products, there are a number of near misses…
HELP TO BUY
This is not a 100% mortgage but is close as the Help to Buy schemes insists on a minimum of 5% from your own resources. However, in the case of Help to Buy 1 Equity Loan this can be a negligible amount. For example:
Purchase price £100,000
Mortgage £75,000
Government funded equity loan £20,000
Deposit £5,000
SHARED OWNERSHIP
Like Help to Buy you will need 5% as a deposit so is not quiet a 100% mortgage but the deposit can again be very small to secure a property. Housing Associations normally allow you to purchase a 25% share. So for example:
Open Market Value £100,000
Purchase price of share £25,000 (25%)
Mortgage £23,750
Deposit £1,250
For further guidance on 100% mortgages / mortgages without a deposit call the experts at Niche Advice on T: 020 7993 2044 or complete the online enquiry form.
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Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.
