No deposit mortgages can help people who are unable to come up with lavish down payments on a standard mortgage and use the no deposit mortgage to buy a new home. With these types of mortgages no cash down payment is required from the borrower and the loan will cover 100% of the value of the home. The first time home buyer who cannot manage to save up for a cash down payment will benefit the most from the no deposit mortgages.
Traditionally a down payment of between 10% and 20% of a property’s value is expected in standard mortgage package and in today’s economic situation this can be an overwhelming requirement. More people can realistically see themselves purchasing a new home if they are not required to come up with a down payment at all.
This seems like a deal that everyone would like to seek; why put down a huge deposit if you don’t have to? There are a few drawbacks including: higher interest rates, the need for steady work and clean credit histories and the lack of lenders willing to offer no deposit mortgages.
Due to an increased risk of never getting the full value of the home should the borrower default on a no deposit loan. Higher interest rates are used and the requirements to qualify for these loans are much stricter making it difficult for some in today’s economy.
Although there are only a few creditors offering these loans they are out there for those willing to seek them out.
When your doing your research always make sure you are aware of all the costs involved in the mortgage.