Can I get a 100% mortgage?
With today’s tighter lending criteria, these products are no longer widely available, although niche products are offered by several lenders. To be offered a 100% mortgage you’re likely to need a family member to be a guarantor for the loan, meaning they become liable for the debt if you default on the repayments.
- Guarantor mortgages
With guarantor mortgages, a family member agrees to guarantee your mortgage repayments. If you can't meet your repayments and your home gets repossessed, your mortgage lender will expect your guarantor to cover the cost of any losses or even repossess the family member’s home to cover them. This is known as using a property as security.
- Family deposit mortgages
With family deposit mortgages your relative must deposit cash, usually between 10% and 20% of the property’s value, in a designated savings account (which will pay them interest in the normal way).
The guarantor won’t be able to withdraw any of their money until the end of a stated period – say, five years. This is known as using savings as a security.
If you meet the repayments and any other conditions for the stated period, the money is returned to your relative. If you default, however, this money is used to meet repayments.