100% Mortgage - No deposit

A 100% mortgage requires no deposit because the lender loans you an amount equivalent to the entire value of the property. Although these types of mortgage are named 100% mortgages they may also be called graduate mortgages or first time buyer mortgages by lenders and brokers. Some lenders also offer 100%+ mortgages specially designed for first time buyers and university graduates. 100%+ mortgages offer as much as 125% of the value of the home. This is very useful for university graduates because the extra 25% can be used to furnish the first home and pay other expenses associated with buying a home.

The main risk to 100% mortgage holders is that if their homes’ market value decreases they will experience negative equity. 100%+ mortgage holders will instantly have negative equity since their mortgage will be larger than their homes current market value from the start of ownership. This is ok if you are not planning to move for a long time, but if you do move you face selling your home and going straight into debt when you move.

As with most non-standard mortgages the lender may require that you take out a mortgage protection policy with them.