One of the most frequent questions we receive from first time buyers and those considering their first steps on the property ladder is; “Can I get a 100% mortgage?”
100% mortgages are exactly as described and do not require any form of deposit to be put down up front by the buyer. These were fairly commonplace during the 1980’s and 90s, however following the financial crash of 2008 and banks stricter lending criteria it was all but assumed that the days of acquiring a mortgage with no deposit were long gone.
Recently the main criteria to be eligible for this kind of mortgage has been restrictive at best with a parental property required to be unencumbered (free of debt) and a minimum income threshold being set, amongst other things.
However, at One 77 we have access to the majority of the mortgage market and therefore have access to a ‘Family Assist Mortgage’ – a 100% mortgage that can offer 4.5x borrowing on the income of the applicant at 100% borrowing.
The criteria for the Family Assist mortgage are not as stringent as previous. Instead, equity in a parent’s property need only cover 35% of the purchase price, however the registered charge remains lower at 20% and remains unserviced, thereby meaning that the parent need not pay anything up front at all.
As an example we took:
£90,000 purchase price
£18,000 charge secured on parental property
£150 per month car finance
£90,000 mortgage over 35 years
Parents property worth £350,000
Parents mortgage is £250,000
Parents equity £100,000
Purchase of £90,000 at 35% = £31,500 equity needed
£18,000 charge registered
So, to summarise below:
• Needs 35% of new purchase price as equity in parents property.
• Registers 20% of new purchase price as charge on parents property.
• Parents pay nothing.
• Client gets 100% lending.
• Parents will need to seek independent legal advice.
• 4.5x income on low income.
If you have found yourself in a position whereby saving for a deposit has proved troublesome or like a continuing uphill struggle and you fit the criteria above then it is advisable to speak to one of our advisers who will be able to take you through the process.
Call our team today on 01249 474952. Alternatively, complete the form below and we will be in touch at the time of your choosing.