100% Mortgage

What is 100% mortgage?

A 100% Mortgage is a mortgage deal whereby the borrow needs to borrow 100% of the value of a property, and because of this does not need to have a deposit.

Before the credit crunch 100% mortgages were very popular, especially with first time buyers as they could borrow the full amount needed without any deposit and in some cases they could borrow 125%.

House prices were rising so rapidly that there was very little risk for the Lender.

Is this because of the recession?

With the collapse of the Banking system and the onset of the recession, house prises fell quickly and as a result of this a lot of home owners were left with rising debts and in negative equity as their loans were far more than the property value.

Therefore most 100% mortgage packages have now been withdrawn from the market as the risks have become much higher and perhaps this is a good thing as it will protect the more vunerable borrowers in an unstable house market.