100% mortgages have always been considered controversial. Allowing homebuyers to finance the entire property cost without a down payment, a 100% mortgage poses a higher risk of negative equity if property values decline.

According to an article in April 2023 by “This is Money”, there were 17 zero deposit products on the market.

Image credit

Normally, first-time buyers are asked to contribute around 10% of the value of the property as a deposit. After the financial crash, 100% mortgages were removed from the market, but due to economic conditions and regulatory changes, these loans are now available.

What is a 100% Mortgage?

A 100% mortgage allows individuals to finance the full purchase price of their home, eliminating the need for an upfront cash contribution, such as a deposit.

Where Can You Get a 100% Mortgage?

The availability of such mortgages has fluctuated over time. Homeowners would need to research their availability.

How Much Can I Borrow?

The amount that can be borrowed with a 100% mortgage depends on the property’s value and the lender’s criteria. Credit history, income and a homeowner’s overall financial stability would be assessed. A survey would be needed on the property.

A homebuyers survey cost does vary, so it is important to shop around. More information can be found here: https://www.samconveyancing.co.uk/news/house-survey/homebuyers-survey-cost-9958.

Image credit

What Are the Risks?

While 100% mortgages allow individuals to enter the property market without a deposit, it also exposes both borrowers and lenders to certain risks. In the event of a decrease in property values, borrowers may find themselves in a situation where they owe more than the property is worth, commonly referred to as negative equity.

It’s important to note that borrowing the full value of the property should be researched beforehand, so potential homeowners understand the risks.