Given the global financial crisis and the associated squeeze on lending criteria, it seems obvious that 100 percent mortgages are hard to find – but not impossible. The trick with mortgages has always been finding the right lender. A lot of people think that if they approach their regular financial institution – like the bank they have a savings account with for example – and they are offered a certain deal on a mortgage, that deal will be replicated elsewhere with other lenders. While it is true that some may offer similar deals, you can rest assured that there are lenders out there willing to lend on very different terms.
Competition in the mortgage market
For example – keeping on with the 100% mortgage theme – if you wanted to buy a property by taking out a 100 percent mortgage, you will be able to find it. In the days before the global financial crisis, a mortgage like that was not too hard to come by, and lenders would fall over each other to get you to sign on the dotted line. Now that a lot of lenders have been burned, they are a little more reluctant than they used to be.
Like we have written about before here at RealEstateMad.com, one good thing to come out of the global financial crisis was that the mortgage business was forced to change. Because of its history of sub-prime lending to people who plain could afford the loan, the business itself was forced to adapt. This resulted in an increase of the number of private mortgage lenders as well as more traditional lenders changing the loan products they have on offer to suit their customers.
Be proactive and get your 100 percent mortgage
But what does this mean for people who want a 100 percent mortgage today? It means that there are a wider variety of lenders are out there who want to offer you the deals that you want. All you have to do is tell a bunch of lenders what you want in a mortgage and see who comes back with the best deal on offer.
Or you could also approach a mortgage broker. These finance professionals have their proverbial fingers in a few pies – have deals with lenders and may be able to help you get the loan you want when you have failed on your own. Of course, remember that brokers usually receive a trailing commission on the loans they broker (they get ongoing percentage commission payments for the life of the loan) – so be aware of that fact.
Another thing to remember about 100 percent mortgages is that you will also have to pay PMI on the loan. This can often be a bit of a burden – but make sure you take PMI into consideration when you sit down to crunch the numbers to see what you can afford. All the lender wants is security on their loan. If you can show them that they will have great security on the money they are lending you, a 100 percent mortgage is totally doable. Your job is to make them see it as a secure prospect.