We were looking at shops
that have disappeared from the high street for last week's Finance Fridays. For this week we're talking about something that has
made a return – 100% mortgages.
This week Barclays has
announced the launch of its first 100% mortgage since the financial
crash of 2008. This means the purchaser doesn't need to find a
deposit to obtain a mortgage. There are a couple of catches to the
Barclays deal in that you need to earn at least £50,000 and you
require a parent or guardian to put 10% of the house price in a
Barclays savings account for three years. In effect it is a type of
guarantor mortgage. At the end of the three years if mortgagor keeps
up with the repayments the 10% deposit can be taken out with account
with interest (currently 2%) added.
With Barclays back in the
100% mortgage market it's sure to tempt other mainstream lenders to
follow. If you're wondering if a 100% mortgage is for you let's have
a look at some of the pros and cons.
Advantages
- Easier and quicker to buy a
property as you don't have to save up for a deposit.
- Money can be put towards
renovations and furnishings.
- Opportunity to get on the
property ladder rather than paying rent.
Disadvantages
- Danger of negative equity if
you need to sell and house prices fall. You may owe more to the
mortgage provider than what the house sells for.
- Interest rates are usually
higher with high loan-to value (LTV) mortgages.
- May need to persuade a
guarantor to obtain mortgage deal.
Have you struggled to save
for a house deposit? Would you take out a 100% mortgage?
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Although this is a scary position to be in, I'm really glad they're doing it. Otherwise so many young people would fail to find somewhere to start a home of their own without extortionate rents.
ReplyDeleteI am so pleased to hear this. Getting on the property market is so hard and I am sure they will be really strict about who they give them too.
ReplyDeleteInteresting. Maybe like this we will be able to afford a home in England now.
ReplyDeleteI hope this will help my children get on to the property ladder.
ReplyDeleteI wondered if this would ever come back. This is confirmation that the general economy must be looking up all round.
ReplyDeleteThere are some worrying cons to this, but overall I reckon that it will be really helpful to lots of people.
ReplyDeleteIt is such a difficult thing to comment on. On the one hand when you are young and just starting it is so hard to buy your first home so this is a good thing, on the other hand it does bring me back to the blacker days of the crisis... But all in all as property prices keep rising, I think it will help a lot of people.
ReplyDeleteI think this will really help first time buys, the only thing is they might not have anyone to pop the cash into the account for three years x
ReplyDeleteI think it's great that it helps first time buyers as it's so hard to get on the ladder these days ins't it! x
ReplyDeleteIt's so good to see mortgages being a bit flexible again and it does mean that people can get their foot on the ladder
ReplyDeleteI'm not convinced its that helpful, as you need good wages to access it anyway and its relying on parents to step in and help and not everyone has a huge amount of cash on hand like that, but its good to hear changes are afoot x
ReplyDeleteWe have a 100% mortgage as this was the only way we could get on the property ladder
ReplyDeleteThis is a necessary step to get the young in the property ladder
ReplyDelete