100% Mortgages: A Lifeline for First-Time Buyers or a Risky Move?

In recent news, there has been talk of 100% mortgages making a return to the mortgage market, which could potentially help first-time buyers get onto the property ladder. This is great news for those who have been struggling to save up for a deposit, especially in the current climate of rising property prices and stricter lending criteria.

For many young people, saving up for a deposit can take years, if not decades, especially if they're paying high rent prices in the meantime. With a 100% mortgage, they can purchase a property without needing to put down a deposit, which means they can start building equity in their own home sooner. This could also provide a boost to the property market, as more people will be able to afford to buy homes, which in turn could lead to increased demand for properties and a stabilisation of prices.

It's important to note that not all lenders are offering 100% mortgages, and those that are will still have strict lending criteria. Borrowers will need to have a good credit score and a steady income to be considered. Additionally, some lenders may require the borrower to have a guarantor, someone who agrees to take on the debt if the borrower can't repay it.

While some may be concerned that 100% mortgages could lead to a repeat of the financial crisis of 2008, it's important to remember that the lending criteria have become much stricter since then. Lenders are now more careful and will only lend to those who can afford to repay their mortgage, regardless of the size of the deposit. Additionally, borrowers can also benefit from fixed rate mortgages, which provide greater certainty and protection against potential interest rate rises.

In conclusion, the return of 100% mortgages could provide a lifeline to first-time buyers who have been struggling to save up for a deposit. This could help more people get onto the property ladder sooner, which in turn could boost the property market and stabilise prices. While caution is always advisable when taking on debt, the stricter lending criteria and availability of fixed rate mortgages should provide some reassurance to borrowers. As always, seeking professional financial advice before taking on any debt is highly recommended.