100 Percent Mortgages
Having a deposit is advisable as there are more products available to you. If you find saving too painful then there are mortgage companies that will lend you the whole amount. There are even lenders out there that will loan more than the value of the purchase price. The excess amount over the purchase price can be used to improve the property thus pushing up the value of the house. So your buying power can go from £nil, due to the fact that you think no one will lend to you, to £250,000, the maximum 100% + loan to value mortgage you can get. This is best explained with an example.
Joanne, who has no deposit, decides to buy a property for £100,000 but the k itchen and bathroom are in poor repair. She gets an estimate for the work and she finds a builder who will do the complete job for £5,000. Joanne decides to go for the property and apply for a 105% mortgage. This will mean that she will get:
• £100,000 to purchase the property
• £5,000 to repair the property.
After the repair the property will be worth £110,000 as it is more saleable now as the property is more presentable to the market. Thus her buying power has increased from £nil to £110,000 due to the fact that Joanne took on a mortgage that was greater than 100% loan to value.
Yorkshire BS
Rate: 3.50% - 1 year, then 4.25% - 1 year. Then variable rate (5.25% currently)
Product type: Stepped base rate tracker
Amount of mortgage: £100,000
Property value: £100,000
Mortgage type: Repayment
Total cost (for seven years): £,51,416.24
Monthly Costs
Initial monthly payment: £500.18
Monthly payment at lender's standard variable rate: £598.64
Set-up Costs
Mortgage indemnity premium: £3,000
Arrangement fee: Nil
Less cash-back: Nil
Net costs: £3,000
Other incentives: Valuation fees refunded , Legal fees refunded
Conditions
Early redemption penalty: 3 % within two years
Conditional insurances: None
How much you can borrow: Single income: 3.5 times, Joint incomes: 3.5 times main income plus 2.2 times second income
Northern Rock
Rate: 3.89% - 01/10/2004, then 5.35% - 01/10/2006. Then variable rate currently)
Product type: Stepped fixed
Amount of mortgage: £100,000
Property value: £100,000
Mortgage type: Repayment
Total cost (for seven years): £50,0473.15
Monthly Costs
Initial monthly payment: £521.30
Monthly payment at lender's standard variable rate: £612.86
Set-up Costs
Mortgage indemnity premium: N/A
Arrangement fee: £495
Less cash-back: Nil
Net costs: £495
Other incentives: None
Conditions
Early redemption penalty: 2 % of original loan on full redemption within three years.
Conditional insurances: None
How much you can borrow: Single income: 3.5 times, Joint incomes: 3.5 times
plus 1 times second income or 2.75 x joint income.
Scottish Widows Bank
Rate: 3.89% - 30/09/2004, then 4.1% - 30/09/ 2005, then 4.80% - 30/09/2008. Then variable rate (4.9% currently)
Product type: Stepped fixed
Amount of mortgage: £100,000
Property value: £100,000
Mortgage type: Repayment
Total cost (for seven years): £47,304.58
Monthly Costs
Initial monthly payment: £521.30
Monthly payment at lender's standard variable rate: £578.20
Set-up Costs
Mortgage indemnity premium: N/A
Arrangement fee: £295
Less cash-back: Nil
Net costs: £295
Other incentives: Valuation fees refunded - max £250 Legal fees refunded - max £150
Conditions
Early redemption penalty: 3 % of amount until 30/09/2008 plus legal and valuation fees reclaimed within three years.
Conditional insurances: None
How much you can borrow: Single income: 3.5 times, Joint incomes: 3.5 times main income plus 1 times second income or 3.5 x joint income.
