Mortgage deals keep disappearing
Since the latter part of 2007 the world of mortgages has seen a lot of changes, and the sector has been in turmoil ever since this time. Read more
Tags: property's value, range, Northern Bank, property, no-deposit mortgage loan, 100% mortgage, low level, Mortgages
100% mortgage customers should watch out for negative equity
August 6, 2008 by admin
Filed under News, News-Mortgages
Over recent years the number of 100% mortgages being taken out has risen, with fewer and fewer first time buyers able to afford to raise the deposit to purchase a property because of the cost of properties in the UK at present. Many lenders will not offer 100% mortgages to applicants because of the risks involved, but there are still many lenders that do offer 100% mortgages to first time buyers, and many first time buyers have taken these to enable them to purchase a property without the need to have a deposit available.
However, some experts have warned that consumers that are now thinking of taking out a 100% mortgage need to consider the risk of falling into negative equity. House prices in the UK have already fallen unexpectedly in September 2007, and experts have warned that the fall in property values could continue over the course of the year. This means that those taking out 100% mortgages now could soon find that they are actually in negative equity if house prices do continue to fall as predicted.
One industry professional stated: ‘There are indications that the house price boom is slowing, so anyone taking out a 100% mortgage is risking being stuck in negative equity. And if you add hefty fees to your mortgage, the risk is increased.’ Negative equity is where you end up owing more on your property than the actual value of the property.
In the past six months alone the number of 100% mortgage deals has increased from 92 to 160. Many of those that have recently taken out 100% mortgages may already have found that they are slipping into negative equity following the September 2007 price fall.
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