100% mortgages are becoming increasingly popular in the UK, with the number of homebuyers taking this product out almost doubling in a year, according to a broker cited by This Is Money.
Many consumers are borrowing up to 125% of the property’s value, which provides them with an allowance for furnishing and decorating. However, as a result, homebuyers will be faced with greater long-term debt.
The primary benefit of the 100% mortgage is the opportunity it gives to first-time buyers, allowing consumers to gain their first step onto the property ladder, even if they have no savings, in a day and age where the population is falling further into debt.
According to Brokers London & Country, the number has doubled for homeowners taking out a 100% mortgage in the past year. For mortgages over 100%, the brokers claimed there had been a 95% rise in the 12-month period, reported This Is Money.
Furthermore, there are at present 155 such mortgages on offer, according to Moneyfacts.
However, the increased competition may bring good news for borrowers. Ray Boulger, senior technical manager at independent mortgage broker John Charcol, said: The good news for borrowers here is that as competition increases, the premiums usually associated with these kinds of mortgages should be reduced and I would expect to see the cost of borrowing 100% or more to come down by the year end.