If you haven’t saved up much money to put down a deposit on your property, a 100% mortgage could come to the rescue. As you would expect, this is a mortgage which will pay for the entire cost of the property (although of course you still have to stump up the fees).
This sounds great, but not all lenders offer a 100% mortgage product, invariably you’ll pay a higher rate of interest, and you will also usually be subject to a high-borrowing charge. It has plenty of other names, but a high borrowing charge is an artificially increased rate of interest usually on the last 10% that you borrow (i.e. above 90%) to cover the extra risk of lending you so much cash.
If you’re borrowing so much in order to have some money for e.g. decorating and furniture, then you might consider separately establishing your mortgage and then obtaining a further advance (which can be cheaper than a 100% mortgage); or indeed going for a cashback product at the outset.
There is a fair selection of 100% mortgages out there (e.g. the Royal Bank of Scotland, Bradford & Bingley), and some of the local or specialist building societies will lend 100% in their target areas (the Cumbria, the Teachers’). Northern Rock will lend you up to 120% of the property’s value if you really need it; and Scottish Widows has a good selection of high loan products for good borrowers.
