100% Mortgages
If you are on a tight budget you may need a 100 % mortgage – a loan for the full purchase price of the property.
The problem is that your choices are limited. Few lenders offer 100 % mortgages and the ones that do charge a higher interest rate than they would for loans covering a lower percentage of the purchase price.
You will also find that as well as having to pay a higher interest rate, you will be charged a bigger mortgage indemnity guarantee (MIG) premium than if you put some of your own cash towards the purchase price. However, to help cashflow, most lenders will allow you to add the MIG to your mortgage. Bear in mind this means you will be paying interest on the MIG for many years.
If you are borrowing the maximum, you should look at fixed or capped interest rate mortgages, since these buy valuable protection against rising interest rates.
Pros
You can buy a home if you have very little spare cash
Cons
Lack of choice – Few lenders offer them
High interest rates.
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