Popular 100% mortgages are no longer available in the United Kingdom or for that matter anywhere in the world. As banks worldwide have had to charge off losses for unpaid loans on over-inflated home values, they have sought to guard against future similar losses by requiring borrowers to place from ten to twenty percent of their house purchase costs on deposit.
Even some of the more flexible lenders such as Abbey Mortgages are requiring a minimum of ten percent deposit. Still, when one considers that home values in the United Kingdom have decreased by an average of 30% over the last 18 months, paying 20% as a down payment may not be a bad idea. Very simple arithmetic shows us that the thirty percent reduction in prices, coupled with the twenty percent deposit requirement results in a mortgage owed of just half what it would have been two years ago with a 100% mortgage.
Another factor in consideration is that when house prices begin again to escalate, this strong equity position will allow one to remortgage this same home and pull from its equity cash for other purposes. The free remortgage calculator tool available at creditchoices.co.uk can be used to allow one to determine the exact amount of this future transaction.
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