100% mortgage loan: it is a hundred percent financing

    by Esteri maina

The traditional mortgages require that one must pay a down payment before they start paying the monthly installments.

This may not be easy for a young person that is yet to receive his or her first paycheck or has some few on their names.

This should not mean that their dreams to own a home of their own are doomed; the 100% mortgage loan plan and their credit rating is the path to their reality. A 100% mortgage should be considered as a mortgage loan by those who find it difficult to pay the 10% down payment, which is the normal rate, asked by traditional mortgage bankers for a fixed term loan.

A person picking a 100% mortgage financing permit the possibility to sacrifice the down payment.

Usually, in a mortgage, the banker does not make a loan for the entire amount of a home sale price. In its place, the borrower is asked to pay a certain percentage of the mortgage amount in the form of a down payment. This provides added protection to the mortgage banker. Nevertheless, 100% mortgage loan plans allows the borrowers to get the entire amount of the loan, even if it does cost more in interest in the long run.

There is no need to make any down payment. The whole loan is made for your use aligned with the full sale price of the home.

Various types of 100% mortgages

There are various types of 100 % mortgages to apply for:

The 103% mortgage enables the borrower to cover the cost of closing on the property, The 107% mortgage loan also gives the borrower a option to finance for fittings and repairs.

One thing a person who need apply for and secure this type of loan need to acknowledge is that they will have to forfeit extra cash.

100% mortgages carry an elevated interest rate than the conventional mortgages.

The majority of bankers also charge additional closing fees such as higher lending charge when paying out 100% mortgages.

Since this is a debt for a longer period, it is imperative for you to deliberate this and the market interest rate when applying for this loan

With escalating real estate prices, the mortgage amount also swells leading to a matching increase in the down payment amount, as well as a higher monthly payment.

Advantages of 100% mortgages

There are many monetary advantages linked with 100% mortgages.

Down payment is not necessary for one to own a home. A 100% mortgage allows for the purchase of property without worrying about this mandatory issue with conventional approach.

Some mortgage lenders that lend 100% on real property also allocate for the payment of stamp duties, and such costs related with the purchase of a house. One can also go for shopping for house fixtures, with the mortgage cash. The demerits of 100% mortgages

This type of mortgages has severe demerits as well. One of the major one is the risk of the borrower pushed into a point of negative equity.

This happens when the price or value of the home bought diminishes after the transaction. This only translates to additional cash being sought by the lender to cover up for the deficit, as the mortgage quantity taken by you for the house would have become more than its present market value.

It should also be noted that in situations of negative equity, the borrower is not entitled to extend the time to meet the bank's security call.

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About the Author

This is an original article written by Esteri Maina on100% MORTGAGE</Esteri Maina is an author with a great gift and full of inspiration