This month sees a blast from the past with the return of the 100% mortgage, last seen just before the market dropped significantly back in 2008. Many experts apportion a significant amount of blame to lenders who were offering similar mortgages all those years ago. So with un-responsible lending seen as one of the downfalls of the property market, how does this one fair up…
The Halifax have been back in the headlines this week with the release of their brand new 100% mortgage.
Without looking a bit further into the conditions and small print etc. it could be seen as a scary reminder of days gone by when deposits weren’t required and lenders were giving away mortgages to the tune of 120% of the property value.
You might be surprised to discover that there already options for cash strapped buyers who have not been able to muster together a deposit to get their foot on the ladder.
In fact, according to the latest figures, there are eight 100% mortgages currently available.
Still, it’s nowhere near the lending frenzy that took place in the run up to 2008 when there were 238 available.
However, this will be the first offering from what is seen as a “mainstream” lender and it will certainly be interesting to see if and how rival lenders choose to compete and whether this sparks a new era of “depositless” lending.
With the announcement of this latest 100% mortgage, there will have been a new enthusiasm from those who had thought that owning a property was still a long way off.
There will have been a spike to the traffic figures for property websites such as Hannells.co.uk and rightmove.co.uk as newly enthused house hunters started scanning for their new dream home.
However, for those that read past the headline, you’ll know that this 100% mortgage comes with a twist.
To be able to take advantage of this latest mortgage, you’ll need a “helper”.
Parents across the land will be pleased to know that this helper usually comes in the form of the “Bank of Mum and Dad”.
This helper will need to be able to provide a 10% deposit for the property as a guarantee which goes into a savings account, linked with the mortgage.
Barclays have also reiterated that they will be carrying out a full affordability check on borrowers to assure that adopters are financially sound and will be able to comfortably afford the repayments.
Under the deal, the “helper” would have their 10% deposit returned to them with interest after the three years, providing that the borrower has kept up with their mortgage payments.
Those concerned with the re-introduction of these types of mortgages should rest assured that with the regulations and strict legislation that lenders have to abide by, risky lending is significantly less likely to happen.
Plus, it’s worth noting that the bank of England can use its powers to put a halt to bad lending practices if it becomes about the UK property market getting too “hot”.
If you’re looking for to make a move and would like to find out more about the mortgages that are available to you, get in touch with your local branch of Hannells today and book in to say one of our excellent financial advisers who will search the market for you to help you find the best deal.
For contact details of all our Derby branches, visit out contact us page HERE.
