100% mortgages make a comeback, giving hope to renters seeking to get on the property ladder.
In today’s challenging market, where rents are increasing and the cost of living is rising, it is getting progressively harder for aspiring homeowners to save enough for a mortgage deposit.
However, the revival of 100% mortgages brings hope to renters looking to enter the property market.
The return of 100% mortgages
After their disappearance following the 2008 crash, the reintroduction of 100% mortgages is making waves. With lenders now willing to offer 100% mortgages, a renewed sense of confidence floods back into the market, dispelling fears of the impending crash that has been heavily reported in the press.
Understanding 100% mortgages
A 100% mortgage lives up to its name by eliminating the need for a deposit. Traditionally, a mortgage would require a minimum 5% deposit. However, with a 100% mortgage, even a 5% deposit would render the applicant ineligible to qualify.
This type of mortgage provides a genuine opportunity for renters to step onto the property ladder without scrambling to save a deposit or relying on assistance from family members.
Securing a 100% mortgage
Currently, only one lender is offering true 100% mortgages, which they market as the ‘Track Record Mortgage’. Other lenders offer similar schemes, but none are genuine 100% mortgages. These alternative options rely on the bank of Mum and Dad, requiring them to deposit money with the bank to support the application as a form of guarantee.
Eligibility criteria for a 100% mortgage
To qualify for a 100% mortgage, applicants must meet the following criteria:
- Aged 21 or over
- First-time buyers (if the application is joint, both applicants must be first-time buyers)
- Possess a deposit of less than 5%
- Maximum borrowing limit of £600,000
- Must not be purchasing a new build flat
- No missed payments on debts or credit commitments in the past 6 months (e.g. mobile phone bills)
- Demonstrated track record of paying rent consistently for at least 12 consecutive months out of the past 18 months
- Demonstrated track record of paying household bills (e.g. utility bills, council tax, etc.) for at least 12 consecutive months of the past 18 months.
The importance of a high credit score
Creditworthiness plays a crucial role, as each lender has its own credit scoring matrix. Obtaining a 100% mortgage requires the highest tier of credit score and a strong credit history with well-maintained accounts to ensure eligibility.
Exploring your options
If you are interested in finding out more about 100% mortgages and exploring your eligibility, please feel free to contact us for a no-obligation chat. Our team are available to provide you with information and guidance tailored to your specific needs.
Alternatively, if you do not meet the criteria for a 100% mortgage, there are other schemes that you may qualify for. To discuss your eligibility for other available options, feel free to get in touch, and we’ll be happy to help build your strategy for home ownership.
For more information or support, please do not hesitate to contact our specialist team of advisers.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.