100% mortgages possibly returning

[salto]

I was reading an article before which said Skipton Building Society are looking to bring back 100% mortgages. It’s currently awaiting approval but is thought to be designed to allow people who are currently renting and can evidence rental payments to buy a home without a deposit. It will be subject to strict criteria and good credit scores.

This would benefit so many if it happened, including us. We currently have a 5% deposit but getting to 10% will be hard considering how high house prices are at the moment. It’s also nice to think we could keep this deposit as a safety net or rainy day fund.

Other than the risk of negative equity what are you thoughts?

Don't do it is my advice.
If the building society goes bust and ends up being taken over by a closed lender you will be a mortgage prisoner and that's no fun (speaking from experience)

Negative equity is only a problem if you need to sell. If you can sit tight and ride it out then that's ok.

I think pp brings an interesting perspective. What happened with the move to the closed lender? Did they honour the t's and c's of your mortgage?

I got a 100% mortgage with my now ExH. Mortgage was for £125k. Finally managed to sell it 15 years later for £110k so lost £15k. Luckily had paid mortgage down to £85k. Couldn't have got on the ladder otherwise

I think people who are regularly paying crazy rental prices should be able to take a 100% mortgage if they want. Lots of the negative equity came from the 125% mortgages Northern Rick did if I remember rightly.

There is a big case going on regarding mortgage prisoners right now. Northern rock mortgages were sold on to a variety of closed lenders some of which are totally unscrupulous. Interest rates are going up and up to above ten per cent in some cases and it's impossible for people to move . Luckily mine was taken on by a company that's a subsidiary of tsb so I was able to get a rate transfer fixed rate for 4.5 % for 5 years however we were paying about 8% before I managed to get that

We had a 100 percent mortgage

With strict criteria I think it's a good idea. If there's 2 people with steady earnings, there should be some form of government assistance to help security in this situation. Mortgage prisoners sounds horrendous.

I'm looking to purchase a BTL with some capital to supplement me going to PT hours. If I had 5% deposit of just £3k, I could get £650-£750 pcm & have a mortgage paid off within maybe 10 years. I think renters who want to buy should have this opportunity. I like in a small town. Where the houses are more expensive it becomes more difficult I think

Surely this will only serve to drive House market prices higher?

I had a northern rock 110% mortgage , young naive and stupid ! Worst thing i ever did … well except the guy I bought it with but that’s a different thread 😂 it’s awful being trapped in negative equity and not being able to remortgage whilst rates are increasing and you’re completely stuck.

I don’t know.

It’s really hard to save a 5% deposit, when you have high rent to pay. I sympathise. But I think it’s valuable to have at least that 5% deposit and the experience of saving for it.

Because when you become a home owner, it’s not rent per month = mortgage per month. It’s mortgage per month PLUS repair, maintenance, Oh Shit! funds. If you’ve always rented the high costs of maintaining or repairing or renovating a property can be a huge shock.

@newjobnewstartihope that sounds hideous. How were you stuck with them, have you not been able to remortgage elsewhere?

My feeling is they are doing it to do anything to keep house prices as high as possible.

So you the borrower are taking all the risk and housebuilders can get richer and richer and richer.

This needs to stop.

Because interest rates are rising and won't come back down to near zero, but wages are not, banks are now offering 40 year mortgages, intergeneration mortgages and 100% mortgages.

Anything except allow the housing market fund an affordable level.

It might take a year or so, but people have to sell houses, if buyers refuse to pay more than they can afford or refuse to take all the risk the market will start to right itself.

Isnt that the same risk with any mortgage lender? No matter what percentage of mortgage you take?

Is Skipton the only one?
Just pondering the situation with bank runs.
If, just if, there were savers who weren't happy with that and they moved their savings out the Bank or BS would be in real trouble.
Surprised that the regulator is even considering it.

There should be separate provisions to stop that happening and I believe that the NRAM mortgage prisoners are finally getting the help they deserve.

It's ridiculous that people are trapped in an expensive and unstable rental market when the main reason they can't save for a deposit is because they're paying rent at a level well above what it would cost them to buy the same property with a mortgage.

100% mortgages will just push house prices up even more to the point there will be nowhere else to go.

Even a small crash with a 100% mortgage and rising rates and a sudden roof bill or the block of flats needs £15k off each owner as the service charges didn’t make a big enough sinking fund for the maintenance of the billing can ruin you. Having to sell your property at a loss, thus owing the bank thousands AND having to find a rental. It’s not fun.

I guess it's a good idea for people caught in the renting trap, where they can afford to pay a lot on rent but not to save money at the same time for a deposit. As long as proper checks are done to make sure people can afford the repayments, same with any other mortgage.

I don't think I'd risk it as a renter, but I'm in housing association so I have low rent anyway.

There's an interesting article about it from Which on the pros and cons

https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/100-mortgages-aKHLU9B2Mhov

There will never be 100% mortgages for BTL.

@BarbaraofSeville it's recognised but no help as yet

95% mortagage are good for FTB but 100%? I think it is good to be able to demonstrate some ability to save. It is not as simple as - "if you afford rent then you can afford mortgage payments" As others have pointed out homeowners need to be able to save for repairs, not all of which can be put off. In Janaury we ended up having to find over £1,000 to repalce our washing machine and and pay for assocaited plumbing and pipe work that needed doing at the same time.

Also if you lose you job or interest rates suddenly go up, you still need to find that extra money to pay the mortgage, no housing benefit for home owners.

I am not in favour of them, one more thing to increase house prices. Even 1% more each year adds up.

Other things I'd do first though, such as changing the house sale and purchase process to the same as Scotland unless someone can come up with a better option. Spivs and chancers should have no place in home ownership.

Not everyone with a deposit has saved it though, if DS wanted a 5% deposit we could just give him it, so having a deposit doesn't prove you can save.

Oh come on - plenty of FTB have not demonstrated the ability to save. Plenty have been given their 10% deposit (or whatever percentage) by their families.

Just because some FTBs don't have this kind of family money, and cannot afford to save on top of paying extortionate rent doesn't mean they couldn't handle a mortgage just as well as the rest of us.