I might need a 100% mortgage, are they worth the risk? Is there another option?

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My girlfriend and I are renting, and the thought of pouring another £12k into our landlords account and having nothing to show for it is winding me up!

Although I know we can afford the mortgage repayments as they will be less than our current rent, we can’t afford deposits, agents fees and stamp duty etc.!

We may be forced to get a 100% mortgage, something I really didn’t want to do!

Is there any other option for people in our situation?

Alternatively, if we get a 100% mortgage, is there any way that in a year or two, we can re-mortgage our house and if the property’s value has increased or we have saved enough money, we can essentially pay a deposit and have a mortgage for 90% of the property’s value?


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Other options include:

  • Find somewhere cheaper, which takes into account the costs of buying.
  • Get a better paid job, as suggested by my ex-wife when the bills constantly exceeded our income…
  • Buy in a stamp duty exempt area, which is what I have done after making the wife into an ex-wife.

As property tends to continue to go up in value, and as you repay the mortgage, you eat into the capital you have borrowed, over time the difference between the current value that can be realized for the property and the amount you owe to the mortgage provider (called equity) will widen, and of course you can use that difference, if you want, but you might be better off leaving the equity to let your 100% mortgage drop to something less over time. For example, I took out a 95% mortgage three years ago, and it is now less than 80%. This has allowed me to take a payment holiday this summer when I was made redundant.

The key thing is to not overcommit yourself. Make sure the repayments can be met comfortably (a good rule of thumb is that your housing costs should not exceed 1/3rd of your net income), and also consider how you would cope if interest rates notch up a couple of extra points over the coming months or years. You need somewhere to live, but you also want to be able to enjoy life as well.


“If property prices remain the same or increase there is no problem with a 100% mortgage as you are buying the property. The risk is if there is a crash you could end up in negative equity (ie you owe more than you are worth). You are right is assuming that in two years you can remortgage and reduce you borrowing in the meantime. There are over 12000 mortgages in the UK you have a lot of choice.”

I am Harrold, I am a profession broker. Feel free to contact me if you need any help.

“It might be worth trying to get your deposit moneys from another source, ie bank loan. Or try and find a new build home, they often offer lots of discounts etc. for 1st time buyers. Fairfield is just building near me and they are offering to pay your 5% deposit, and give you £1,000 cash back. Bear in mind you have to pay for a local authority search (£200+), drainage search (£35+), environmental search (£150+) as well as stamp duty”

I guess the advice would be different if you are a variable rate mortgage holder… as the rates go up, it would make sense to pay down more mortgage as you’re in effect getting the guaranteed return of the mortgage rate (currently 5.12% in Australia in Oct 2022). Personally, I have an offset account AND pay extra in the mortgage, so some is locked away forever in the mortgage repayments, whilst some is earning the mortgage rate but still accessible if needed.

“I took out a interest only 25-year mortgage that I paid off in 14 years as I always realized ultra-low interest rates were not going to last forever and this was an unbelievable opportunity to actually pay off the capital. Interest rates going up are great news for savings. The big learn – pay off your debts as soon as you can and live as a free man – the debtor is always slave to the creditor.”


“I recently took early retirement as did my wife. We have an interest only fixed mortgage well below value of house and we were planning to keep this going into retirement, however it finishes early next year and we haven’t secured a new deal so the question now is whether to use a big chunk of our pension lump sum to clear mortgage or invest to try and beat the interest only rate…timing is tricky as interest rates are turbulent and deals on both savings accounts and mortgages are changing daily.”


“I bought my place 20+ years ago at 7.5%. A few years before rates were at 15%! The recent (last few years) low rates were not typical and not likely to last. I make bi-weekly payments which gives an additional principal payment at end of year. (I’m in US so may have different loans). The good news is savings interest went from 0.01 up to 3 % whoopee!.”


By Alexandre Laurent

Alexandre Laurentl is working in the jewelry and investment gold since 2002. Alexandre graduated from The Normandy School of Business and from the University of Perpignan a Bachelor of economics in 1995.

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