A 100% Mortgage where the loan amount is equal to the purchase price therefore no deposit is required.
Plus points: It can be very helpful when starting out on the property ladder when you have little or no savings.
Points to Watch: Don’t over stretch yourself. Interest rates can go up as well as down. When it rises sharply, your interest payment instalments may increase substantially.
How big would your repayments be if interest rates rose by 1 percent, say? Could you afford a rise of 2 percent? It has happened in the past.
If property prices fall you may find that the amount you owe to the lender is more than the value of your property causing you to be in a ‘negative equity’ situation.
