How does a 100% mortgage work?

100% mortgages can seem appealing, especially if you’re a first-time buyer and struggling to save. Yet, it’s a big risk that shouldn’t be taken lightly – so make sure you know how it works and what’s at stake, before you buy a property. What is a 100% mortgage? A 100% mortgage is a loan for the entire cost of the property you’re buying. These come in various forms but they all rely on you having a family member who’s willing and able to act as your guarantor. They will either have to use their own home as security or lock their savings into a special account until you’ve paid off a set amount. The biggest risk with a 100% mortgage is that you could fall into negative equity, which means owing more to your mortgage lender than your property is worth. This could cause you problems if you need to move home or remortgage. As you pay off more of your mortgage and own more of the equity, negative equity becomes less of a concern - but in the first few years of a 100% mortgage, the risk is significant. Which? Mortgage Advisers can help you decide whether a 100% mortgage is right for you. To speak to one of our team, visit https://ift.tt/1F8YhNb Which?: http://www.which.co.uk Twitter: https://twitter.com/whichuk Facebook: https://ift.tt/1fAOmna