100% Mortgages

koopa_coffee

angel.cake wrote: »

Don't know where you live but clearly not in the real world. A studio flat where I live is £99k. End of.

Agreed. A small one bed flat above a shop is around £125k-£130k here.

Brallaqueen

I've seeen a couple of 100% mortgages around, most for existing customers but there is one for FTB. Already heading down the slippery slope?

http://www.money.co.uk/mortgages/100-mortgages.htm

iB1

Brallaqueen wrote: »

I've seeen a couple of 100% mortgages around, most for existing customers but there is one for FTB. Already heading down the slippery slope?

http://www.money.co.uk/mortgages/100-mortgages.htm

I just looked at the Tipton & Coseley mortgages, and the 100% LTV ones are only available if a direct family member puts a charge on their own property, which stays until the LTV drops below 75%. That sounds horrendously nasty to me.

KS1977

I don't think 100% mortgages are a bad idea at all. For some people, it is very difficult (depending on circumstances) to be able to afford to save up for a deposit. It's very easy for people to say stop them, but they are ideal for those getting on the property ladder who haven't had chance to save. If your income is regular and it is reasonable enough, then why not?

There are 95% mortgages if you look around and I believe if 100% or 95% or whatever, is good for you....then go for it!

KS1977

olly300 wrote: »

100% plus mortgages will come back. They did after the last recession to allow people to move from one property to a larger property who where in negative equity. Though personally I don't think FTB should be allowed them.

Can I ask Why? :-)

VIGILANT22

KS1977 wrote: »

Can I ask Why? :-)

To start with, why don't they have a deposit?....If they can't save from own income for a deposit, how would they be able to have an emergency fund of 3/6 months........

iB1

KS1977 wrote: »

I don't think 100% mortgages are a bad idea at all. For some people, it is very difficult (depending on circumstances) to be able to afford to save up for a deposit. It's very easy for people to say stop them, but they are ideal for those getting on the property ladder who haven't had chance to save. If your income is regular and it is reasonable enough, then why not?

There are 95% mortgages if you look around and I believe if 100% or 95% or whatever, is good for you....then go for it!

What happens if you buy somewhere and it immediately drops in value?

Look at what happened with new-build houses near the peak of the market. You buy for £125,000 and 3 years later it's worth £105,000

With a 100% mortgage you're already in £20k of negative equity.

Even now, new builds are being valued at lower than what the builders are trying to sell them for. So again, you're immediately in negative equity as soon as you put your key in the door.

Still think 100% mortgages are a good idea?

Regshoe

KS1977 wrote: »

Can I ask Why? :-)

I assume you are asking why FTB shouldn't be allowed the 100% and others should, rather than why anybody should be allowed them at all.
Despite my earlier post demonstrating the potential difficulty in saving for a deposit I do believe that in general people should be required to have some level of deposit, 10% would seem "reasonable".

Whether we like it or not our own finances and the finances of the country in general are inexorably linked to the financial performance of the banks and building socities that lend money for mortgages. As such we should all want them to be prudent when lending money. In the case of a mortgage requiring a deposit gives the lender a buffer for a fall in property value (assuming the borrower were to default).

For small unsecured loans you can attempt to recover money via charging orders, attachment of earnings, or seizing goods. Clearly the first method wouldn't work for mortgage debt and the second two are potentially insufficient to cover negative equity that could occur with a 0% deposit (plus both of the second two methods tend to be costly and not very efficient).

This leaves the deposit (plus in certain cases guarantors with other equity) as the only viable way to provide a certain level of security for the lender.

For an existing borrower who may have started with a deposit but now has negative equity / no equity it may be worth allowing them a 100% (ish) mortgage, at least from their current lender, as the deposit buffer is gone in any case. The only additional risk that you would suffer would be the any extra money that is given to the borrower.

You could argue that by charging higher interest rates for lower deposits (as is the case between the various LTV %s now) that the risk is covered by the additional returns, however this can be difficult to manage and to predict (plus for a mortgage you can only go so high with the interest before nobody would be able to afford anything near what they could afford to rent). Having worked in finance for a sub-lender I can assure you that just because a company is charging seemingly extortionate rates of 60%+ on secured and 150% plus on personal loans it does not necessarily mean they are actually making a profit.

KS1977

iB1 wrote: »

What happens if you buy somewhere and it immediately drops in value?

Look at what happened with new-build houses near the peak of the market. You buy for £125,000 and 3 years later it's worth £105,000

With a 100% mortgage you're already in £20k of negative equity.

Even now, new builds are being valued at lower than what the builders are trying to sell them for. So again, you're immediately in negative equity as soon as you put your key in the door.

Still think 100% mortgages are a good idea?

Yes I do...as I mentioned in my post, it all depends on circumstances. I am a FTB and do not have enough savings. Therefore one of my options could be the 100% mortgage! I earn enough money for it to be ok......How else would I get on the property ladder? As with housing and their prices, you can never judge what will happen, but if it means me getting on the property ladder, then so be it.

But everyone is entitled to their opinion, that's what this forum is about. We will just agree to disagree.

VIGILANT22

KS1977 wrote: »

Yes I do...as I mentioned in my post, it all depends on circumstances. I am a FTB and do not have enough savings. Therefore one of my options could be the 100% mortgage! I earn enough money for it to be ok......How else would I get on the property ladder? As with housing and their prices, you can never judge what will happen, but if it means me getting on the property ladder, then so be it.

But everyone is entitled to their opinion, that's what this forum is about. We will just agree to disagree.[/QUOTE

I am so happy no 100% mortgages available..if only due to posts like this...:)