The UK 100% mortgage

A UK 100% mortgage offers you a borrowing of 100% (and very occasionally more) of the value of the property, with no deposit to find. Interest rates for a UK 100% mortgage may be fixed, variable, discounted or capped. 

While there are obvious advantages to buying a property when there is no deposit needed, it is important to consider the likely direction of interest rates and the property market over the next few years, and  your ability to maintain mortgage payments, before taking out a 100% mortgage, - see ' risk ' below.

benefit

The main benefit of a UK 100% mortgage is that it allows you to purchase a property with no deposit to find. You receive 100% of the value of the property from the lender. This could be useful if you don't have access to money for a deposit but are sure you will have enough income to cover the mortgage payments and your other living expenses.

risk

With a UK 100% mortgage you may be charged an above-average interest rate because you represent a higher risk to the lender, and will be required to pay a mortgage indemnity premium which buys an insurance policy for the lender which will cover them for a proportion of the loan value in the event of repossession and forced sale of the property.

You could risk facing a negative equity situation if your house price falls below the original purchase price. This implies that if you have taken out a UK 100% mortgage you need to be prepared to own the property for the long term, to ensure that when the property is sold it will raise enough money to pay off the mortgage.

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