Why we bought our first home with a 100% mortgage - despite the risks
Summary
Two couples in the UK have bought their first homes using mortgages that cover nearly 100% of the property price, meaning they paid little or no deposit upfront. These mortgages have higher interest rates and risks, but the buyers chose them as an option due to rising property prices and difficulties saving for a deposit.Key Facts
- Conroy and Amber bought a £242,000 four-bedroom house with a 100% mortgage, paying no deposit.
- Their mortgage interest rate is 5.33% fixed for five years, with monthly payments similar to their previous rent.
- Low-deposit mortgages (less than 10% deposit) are now more common in the UK than at any time since 2008.
- Other lenders like Lloyds, Santander, Skipton, and Yorkshire Building Society offer mortgages covering 95-100% of property value.
- These loans charge higher interest rates and are not available to everyone or for all property types.
- Conroy and Amber plan to overpay their mortgage to build equity faster and reduce risk.
- Another couple, Bronya and George, bought a house in Wales with a 2% deposit and a 5.89% interest rate fixed for five years.
- Borrowers accept risks like negative equity, where the house value falls below what they owe on their mortgage.
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