April mortgages - 100 percent mortgages

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Are 100 percent mortgages always viewed by many as - bad - (?)

Interested in any opinions

Not great in my personal opinion but if its the only way someone can get on the property ladder without pulling together a large deposit and they don't wish to rent then I think it is better option. Much better than the help to buy scheme.

I wasn't aware that anyone offered 100% mortgages anymore after the Northern Rock meltdown....

but yes, If obtainable, I'd say they're looked on as bad

Less than ideal, as you pay for the "privilege" and of course any wobble in house value and you are in negative equity. Of coure in an ideal world everyone would be able to save a 10/20/30% deposit but we don't live in an ideal world do we.

In practice though, if they get you into a house that you own (and thats what you want), and you don't NEED to sell, then they can be a valuable tool. Negative equity is only a problem if you need to sell.

Negative equity.

Disaster waiting to happen.

I do not understand the problem with negative equity.

If you live in a house for five years and then you sell it for £10k less than what you paid for it, you're still better off than anyone who's spent those five years renting.

@Ferro isn’t negative equity when you owe more than the house is worth? So if you sell it for £10k less and you haven’t paid that £10k off the mortgage then you will owe the mortgage company £10k.

Probably not if you’ve paid 6%+ interest a year plus stamp duty and twice for solicitors.

Its more about owing more on the mortgage than the house is worth, which is why higher LTV mortgages are higher risk for both the lender and the purchaser, and therefore higher interest rates are paid).

Only because you've chosen the random figure 10k. Negative equity might be 20k, 50k or 100k.

If you need to move house (for example, you lose your job and need to move to another place to get another one) you might face a big problem if you're in negative equity as you need to stump up cash to cover the difference AND have no money then to buy a new one.

They are really rare these days, and yes I think generally they are a really bad idea. As well as the negative equity trap, if someone can’t even save 5% of the purchase price then honestly they’re either overstretched or not very good with money, so the likelihood of them getting into financial trouble and not being able to pay the mortgage is greatly increased.

Historically I would have agreed with you but now with rents the way they are I don't blame people for not being able to save. There's no easy answer.

There's this one, and a "family/friends' equity" type one with Skipton iirc which gets you to or near 100%.

I think on a small scale it's fine. I could see myself (in other circumstances) applying for it for a house that needed a lot of work doing to it and then doing that work ASAP with the equivalent of my deposit money - if the market is stable the property value will be higher for the work having been done, and when I come to remortgage I am in a better position.

Used speculatively/earnings untested/applied to BTLs - no thanks.

That's fine if in those five years (while paying interest on that 100% mortgage) you've also managed to save up enough to pay the £10k shortfall and the selling costs.
If you haven't then you wont be able to sell and you'll be trapped in a property that may no longer suit your needs.

Whereas if renting you could just up sticks and move elsewhere...

The problem is that often mortgage repayments will be lower than what many are paying in rent so while they will absolutely be able to repay the mortgage and even save on top of that! They are not able to save as much while renting. By the time you save for the deposit over a number of years while renting, house prices have gone up again!
I think under certain circumstances 100% mortgages can be a good idea - for first home buyers who plan to stay for a number of years, reducing risk of negative equity.
Not great for investors and landlords who are looking to make a quick buck without investing any capital.

What's wrong with help to buy?

Is nothing wrong with it as such is just preferable in my opinion as you still need to pay back the equity loan after 5 years so by that time you then have to find the extra money to repay this on top of your mortgage. With fluctuating intrest rates this could cause financial hardship after first 5 years this is in my opinion everyone's circumstances are different may be great for some but the uncertainty would concern me.