Are 100% UK Mortgages Still Possible?

During the property boom, 100% mortgages were available. With falling house prices and negative equity, first-time buyers are finding that 25% house deposits are normal.

Things were very different just a few years ago: Rising house prices quickly created equity, loan defaults were low, and house repossession rates were minimal. In those times, lenders were happy to allow borrowers to take out a 100% mortgage. The world is now a very different place.

One of the biggest obstacles a first-time buyer faces, in terms of getting a foot on the property ladder, is raising a sufficient house deposit. The 100% mortgage helped many first-time buyers get round this problem, but this is no longer an option in the current economic climate.

Falling House Prices and Negative Equity

Falling house prices and the risk of negative equity have led to 100% mortgages being withdrawn from the market, which gives most owners less chance of selling your home. Northern Rock got into massive financial trouble by over-exposing itself to property. They created a mountain of bad debt by offering 125% mortgages to borrowers. Loan default problems set in when the inevitable effects of house price falls and negative equity set in.

According to a report by Standard and Poor; falling house prices were plunging 60,000 people a month into negative equity.

The Availability of 100% Mortgages

There aren’t currently many financial institutions providing 100% mortgages without collateral. However, it is possible for a first-time buyer to get a 100% mortgage, provided that they have a guarantor. A guarantor is normally a parent or friend who uses their own home as collateral in the event of loan default.Although the 100% mortgage is no longer feasible for many first-time buyers, it is still possible to get a 90% mortgage. However, those seeking a 90% LTV can expect to pay a higher APR, due to the higher risk of negative equity and loan default.

Most first-time buyers require a house deposit of 25%. However, there are some 90% and 95% mortgage deals available, for those with good credit and employment prospects. Whether a first-time buyer should be considering buying without a large house deposit, is a matter of some conjecture.Those seeking the best mortgage deal should also consider utilising the services of a mortgage broker, to help reduce mortgage repayments.

Emergency Loans for When It’s Absolutely Necessary

If you find yourself facing financial hardship, a payday loan might be the best solution. Payday loans are short-term loans, and you will be expected to pay the money back when you receive your next pay packet. If you delay repaying a payday loan the interest rate will rise substantially, so make sure you do not ask to borrow more than you can afford to pay back.

The good thing about payday loans is you do not have to have a decent credit score to apply. It is important that you can show proof of income, and if you are unable to you will most probably not receive a payday loan. The amount you will be able to borrow depends on your pay check, and if the lender thinks you will be able to pay the money back on time.

It is very easy to apply for a payday loan, you need to do is find a reputable lender online and fill out some simple details. You must be over 18 years of age and have a bank account. Once they lender approves your loan, the money will be in your account within just a few hours.

Just like with any other loan, payday loans need to be repaid in full plus interest. Because no credit checks are done when you apply for a payday loan, this type of loan is considered to be high risk and therefore the interest is more than a regular bank loan. If you default on your repayments, the lender is likely to give you an extension of one week, but everytime an extension is granted the interest will go up further.

Do not be taken in by all the hype over payday loans, as some advertisements claim they are the solution to all your financial problems. Although they can help you out when you are in our financial fix, you should not rely on payday loans on a regular basis because eventually you will find that the interest makes it very difficult to pay consecutive loans back on time.

Therefore, one should think of payday loans is a solution to a financial emergency but not something that one should take out when circumstances do not deem it absolutely necessary. Also, when you are looking for a payday loan lender make sure you are dealing directly with the lender rather than payday loan brokers. Payday can brokers will also take a fee for putting you in touch with the lender which will push your repayments up further.

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