100% mortgage???

ruggedtoast

I don't disagree with you about the rent. At least if you have a 100% repayment mortgage then you are paying back a bit each month and building some equity. There just aren't any around at the moment that I know of.

The risk is that you can't pay the mortgage, end up being repossessed and find that you sell for less than you bought for, leaving you significantly in debt.

Fwiw I dont see how such an idea could work as any loan you got would go on your credit record, which would be found when the mortgage company did their credit search.

If you were getting an unsecured loan that wasn't legitimate in this sense, and wasnt secured on the property, I would be pretty concerned as to who had actually leant me the money, and what the consequences would be if I had problems paying it back.

Railway arches, large men, and bolt cutters spring to to mind...

Simon_gloster

Technically some lenders will allowba personal loan to form the deposit. As long as the loan is declared as a commitment and affordability stacks up, lending is then responsible. Lenders dont like it but in truth cant really stop it.

Whether or not its the right thing to do is another thing. But the op asking about the possibility of it then yes it can be done. Suggest he goes into the mortgage board.

Thundercat_2

I've always found in life that if something looks too good to be true, it normally is!

What sort of interest are this company going to be charging you on the unsecured loan and the subsequent mortgage?? Normally these types of schemes come at a high cost in terms of interest rates. You could find yourself struggling to pay off any of the loan capital, purely because all of your money is being taken up paying the interest. In this scenario you're no better off than you are now because none of your money will be paying off your mortgage - it'll just go into the pockets of these companies. They promise big things, but the devil is in the detail and you'll probably find in the small print that you're going to be paying extortionate amounts in interest.

I'd be even more concerned if they say they can provide the mortgage - this is normally because a high street bank wouldn't touch it with a barge pole, so your only option is to go with their mortgage, which again will probably involve interest rates far above those of the major lenders.

There's far more involved in owning a house than just paying the mortgage - you've got to factor in solicitors fees, moving costs, maintenance and repair costs (which as a tenant you don't have to worry about and which can cost thousands!!).

I suspect that you've already made up your mind and no-one is going to persuade you that you're making a big mistake. In a few years time when you find yourself in a complete financial mess (and that really is a "when" rather than an "if"), then please remember that the folks on here tried to warn you away from dodgy schemes like this, but at the end of the day you'll only have yourself to blame.

Best of luck...I hope that common sense will prevail...

pinkteapot

baboy wrote: »

By the way this will be my last post
Thanks

See ya.

For anyone coming across this thread in the future, mortgage equity 101:

1. You buy a house for £100k, using a £20k deposit and an £80k mortgage. Two years later, you have to sell (circumstances change). The housing market hasn't done so well and the value has dropped to £90k. You've paid a little off the mortgage, say £1k, so you owe £79k. You repay the bank £79k and you get £11k. You've lost £9k of your deposit but you've still got some money.

2. You buy a house for £100k, using a £100k mortgage because you have no savings. Two years later, you have to sell (circumstances change). The housing market hasn't done so well and the value has dropped to £90k. You've paid a little off the mortgage, say £1k, so you owe £99k. Your buyer gives you £90k. The bank demand £99k from you. Hope you've saved up £9k in those two years or you're stuck/bankrupt.

If you still can't see why paying a deposit is a good thing, you probably shouldn't be taking out a financial product as serious as a mortgage.

partialycloudy

From someone who has a 100% mortgage.....Don't do it. You may think you will live there until you last breath, but life and circumstances change. And when they do, the feeling of being trapped in a property you do not want to live in anymore is quite overwhelming.
We have learnt our lesson, and we are now struggling to save for a deposit whilst paying a mortgage plus other bills. Wheres as if we saved from the outset it would have taken us no time at all.
Find somewhere cheaper to rent so you can save for a deposit.

Notmyrealname

Fire_Fox wrote: »

*Sigh* run a search, it's arrogant to think you know something the rest of the world does not. You live in fantasy land if you think property is a guaranteed investment. It's a gamble, like stocks and shares you ONLY win if you do a LOT of research and you get lucky AND you can afford to ride out the bad times.

Sorry but I agree with the OP. If you actually buy a house as a home and not an investment model, why is a 100% mortgage a problem?

If you buy a new car, would you turn down the offer of being able to buy it 100% on finance if you hadn't money for a deposit? No. And a car is guaranteed to depreciate 90% over its lifetime.

Notmyrealname

ruggedtoast wrote: »

I don't disagree with you about the rent. At least if you have a 100% repayment mortgage then you are paying back a bit each month and building some equity. There just aren't any around at the moment that I know of.

The risk is that you can't pay the mortgage, end up being repossessed and find that you sell for less than you bought for, leaving you significantly in debt.

That can happen on a 75% LTV as well....

Mrs_Imp

I would avoid a 100% mortgage, but that's my personal opinion. I had a 100% mortgage when I bought my first flat nearly 10 years ago. I got very lucky, and was able to sell it 6 years later, but if I'd waited about 6 months longer, I'd have been in to negative equity. I would've been quite happy to stay in my flat (I bought it for the long term) but my job and my OH moved 100 miles away, so I had to move too.

Another factor to remember about owning a house is all the extra costs. Within 3 months of moving in I found that one of my windows had nearly fallen out, so I had to find £1500 for new windows. Then my boiler broke and deposited all of it's contents on to the floor, so I had to find £1000 for a new boiler. Then my roof started leaking, so I had to find more money for that. Then the fridge broke, but I had no spare money to buy a new one, so I just had white cupboard for a while. etc etc.

Before buying a property, you need some savings. Enough to cover unexpected repairs, and enough to cover about 6 months of mortgage payments should you lose your job.

SternMusik

Notmyrealname wrote: »

Sorry but I agree with the OP. If you actually buy a house as a home and not an investment model, why is a 100% mortgage a problem?

For all sorts of reasons mentioned in previous posts, the most important being that circumstances will change, and not only might the house be no longer adequate to the OPs housing needs in a few years time, he might no longer be able to afford to pay for the mortgage or essential repairs to the house. If he is in negative equity he can't move or sell and is trapped.

Notmyrealname wrote: »

If you buy a new car, would you turn down the offer of being able to buy it 100% on finance if you hadn't money for a deposit? No. And a car is guaranteed to depreciate 90% over its lifetime.

Important differences between a car and a house:
- You can take a car with you when you move but not a house.
- The loan on a car is not secured against the roof over your head.
- Having a car taken away from you because you have fallen behind with payments is painful. Having your home repossessed is soul destroying (from what I gather).
- Plenty of people get by without a car, but not having a roof over your head is not really an option for many.

As an aside, there are plenty of disadvantages to home ownership, and buying is not the solution for everyone. Rents may be high but you won't have to shell out for a new boiler or a new roof. And then there is the costs of moving: from one rented house to another you pay for removals. If you own you pay for solicitor, stamp duty, estate agent, survey (possibly several), mortgage application (possibly several) and removals. This can be prohibitively expensive. Also, housing benefit is paid to renters but for home owners it is much more difficult to get assitance with paying their mortgage.

Renting isn't all bad.

The_Earl_of_Streatham

Try looking at it this way, see if it helps.

You can rent a place to live (rental, what you've got now) or you can rent the money to buy a place to live (mortgage, what you'd like). Either way it's rent and if you want to consider it dead money you're at liberty to do that. I'd say it's the price of keeping a roof over your head.

Mortgage rates are creeping up despite historically low base rates.

http://www.thisismoney.co.uk/money/news/article-1607881/Interest-rates-News-predictions.html

There's no predicting what they could do over a twenty five year mortgage life. In 1979 base rates hit 17% and exceeded 10% in the early 90s. Since 1975 and before they were dropped to .5% they averaged more than 9%. That's base rates, mortgages are presently running more than two points above that.

http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

You don't own property until the mortgage is paid off. Before that time you have to maintain and insure someone else's asset. You get the right to live in it, but you get that renting with none of the risk and much more flexibility.

Borrowing money for the deposit is not advisable and may be fraud. I would be deeply suspicious of the people offering you the deposit loan getting you a mortgage. There will be a price to pay somewhere, probably a hefty one.

I speak as a property owner who has been extremely lucky because of my age and circumstances. Looking back I can see how little that luck would have needed to differ to knock me way off course and leave me renting or even homeless at a time of life when I wouldn't want to be.