100% mortgage???

Question

I earn enough money to paid a mortgage monthly but I have not got the money for a deposit and by bank will only lend me 4 times my salary which is not enough to buy a house. Can i get a mortgage for the total cost of a house??

Answer 1

I don't know which country you're in and as the rules vary it's hard to answer. I have a financial company based in the UK so the info below is relevant only to the UK and is for guidance only.

Basically the more you borrow the more it costs - not just in the amount you pay back but in the interest rates charged. A 100% mortgage will normally attract a higher interest rate than a standard 95% mortgage - the norm in the UK is to put down at least a 5% deposit but more if possible.

There are also a limited number of lenders who are prepared to lend 100% and there are rarely special offers such as discounted rates. If you do get a discounted rate check what the tie-in period is and what penalties there are if you move, remortgage, settle up etc.

Further, you'll probably have to pay a MIG (Mortgage Indemnity Guarantee) which is a type of insurance and is generally calculated as about 7% of everything you borrow over and above 70% of the value of the property you are buying. This is a lump sum that may have to be paid up-front, in some cases it is added to the mortgage. On a £200,000 loan this means a payment of 7% of £60,000 - i.e. a premium of £4,200 that you have to pay.

I'd also be very wary about borrowing 4 times your annual salary. This is a huge commitment and you need to remember that interest rates for the last few years have been very low. A few years ago they were double what they are now (and even triple for a short time) - could you afford your monthly repayments if they doubled or even trebled?

You also need to budget for all the other costs - the removal, legal fees, disbursements, surveys, possible repairs and renovations, possible retention on the mortgage (where they hold back part of the mortgage until, for example, the property is rewired).

There may be a fee payable to the lender but if you have good credit this probably won't be the case. The sub-prime lenders (the ones who lend to people with impaired cedit), typically charge 2 or 3% of the sum advanced but this can be as high as 10%.

Bottom line - don't rush into anything, make sure you know exactly what you're paying, get clarification on anything you're unsure of and seek professional advice from a reputable company - any High Street bank or building society will be able to help you.

Answer 2

A 100 percent loan - is not totally out of your reach - There are FHA programs, payment assistant programs to help you. Look at your middle credit score, if you do not know your credit scores - have your lender tell you, or pull your credit from the 3 credit reporting agencies - BUT the person you are working with should tell YOU.

Lenders look at the middle score to qualify a person - With a 580 or higher you can get a 100 percent 1 loan. If your credit is low, than you will be going SUB-Prime, and any amount over 80 percent does not have MI - There are alot of companies I underwrite for that does NOT charge MI - normally the rate is slightly higher. Say you got qualified and your rate was 8.50 . The 8.50 does not have MI included. This is a estimate only - ok -


If you go with a FHA loan, FHA has MI included. (With a 580 + you will be going sub-prime the rates are higher by about a 1 percent, but you have no MI. (MI is mortgage insurance in case you default on the loan, it is a way for lenders to have added insurance. It is not the same as Home Owners insurance, ok) VA loans do not have MI insurance.

Conforming A+ borrower's loans have MI included, but the rates are better starting in the mid to high 6's (with rates going up.) The more money you borrow - the higher the rate normally. There are a lot of factors involved.

With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true....

When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now - (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 - This is just a estimate - ok -

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.


Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Answer 3

Hi there. (this is an answer from a UK perspective)

Yes you can (I think Northern rock tend to do a lot of these mortgages), however the problem with mortgages is that the higher loan to value ratio (ie 100% loan to the property value) mean most lenders penalise you with a combination of higher APR on the mortgage rate (ie not access to the best rates) and some charge you a an HLC (higher lending charge).

Also beware that if you take out a 100% mortgage you are also exposed to negative equity ie if the property value decreases over time you're debt is mroe than the properyt value.

however the upside is that you get on the housing ladder sooner.

If possible try and save up a desposit even if you get 5% as this will give you mroe flexibility in the mortgage choice.

The best website to check out for advice is the finanicial services authority website - mortgageslaidbare.info

Also make sure you check out the range of mortgage comparison websites too.

good luck

Answer 4

Buying without downpayment

Lender will give you money for sure. Probably charge you a higher interests rate and extra insurance on the loan for not having the down payment.

Would you consider delaying your plan?

As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.

For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.

Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.

And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.

Answer 5

They are out there. If you're a member of a credit union start there. Better rates, lower fees, not as many crap fees in the closing costs.

Otherwise, start saving for the downpayment. You can do the 80/20 Loan, but beware of the rates. And avoid hybrid loans. (ARMS, etc). Rates are going up, and you don't want to get screwed later when the time comes to Refinance.

Oh, and remember: SELLER PAID CLOSING COSTS. Closing costs can and will run in the neighborhood of $3,000 to $4,500. The more help you can get with that the better.

Edit: Are you a first time home buyer? If so, check your state for any 'grants' HUD (Housing & Urban development) may be handing out. I know in Georgia they have something in which (using an approved lender, ie, countrywide) they'll give you up to 10K towards a home as a downpayment. (assuming one qualifies)

Answer 6

Yep 80/20 loan. A lot of people don't recommend it for some reason or other. Guess they figure if you can't afford a 20% down payment, can't afford a house. The 20% helps so you don't have to pay PMI. We have one through, OCWEN/Deutschland Bank. Crappy interest rates, ARM after 2 years, so we'll do a re-fi. Just shop around, we went through that Lending Tree online. Stay away from Advent as a broker though, tried to screw us in the end, fortunately I found it before it was too late. Also stay away from those interest only loans.

Answer 7

There are 100% mortgages available, however they carry a higher interest rate, and will require PMI (Mortgage insurance).
You will still need to have enough cash for the closing costs. Contact a mortgage broker, and a real estate agent. They can tell you what types of mortgages you could get, as well as what your closing costs will be.

Answer 8

If the money is so tight, how are you going to put even the minimal amount of furnitures/appliances and other necessities to make house a home, or take care of initial problems?

You should really save some money before purchasing a house. There is alot more to buying a house than just making a monthly payment.

Answer 9

100% mortgage is not a problem, but you are going to be limited more by the maximum earnings multiple you can get than by your lack of cash. Consider joint ownership with a friend or relative perhaps. And don't forget that negative equity is a real risk - if affected a lot of people in the late 80s.

Answer 10

You can get them all day long as long as your credit score is good enough. You'll need to talk to a mortgage broker, not a bank because the broker will have these special programs. Banks have strict guidelines. Saving up for a down payment can sometimes be futile, because as you're saving, the house prices are appreciating and you'll need even more saved. It depends on how fast you can save it up.