mortgage updates
Posted on July 22, 2009
Filed Under Home Mortgage
A 100% mortgage is obviously a boon for financially weak borrowers who cannot put up any deposit to avail the loan. The scheme allows borrowers to take out an amount equal to the value of the collateral without submitting any deposit, which in other cases is usually a minimum 5% of the amount to be borrowed. Also, borrowers have a choice of mortgages to choose from, just as they would in a more conventional product. They can choose from fixed rate, discounted rate, capped or variable rate. However, they can not take out a buy-to-let mortgage under this scheme unless they put down a deposit.
These are also available to people with a poor credit rating. There are several sub-prime mortgage lenders offering such packages for homebuyers, including 103% or 107% mortgage loans to cover their closing costs. However, in this case a majority of lenders have stricter terms and higher rate of interest because of the higher risk involved. Hence, those with a good credit history can expect to get more attractive terms and affordable rates of interest. Typically, 103 percent full document loans require a score of at least 600. A credit score of at least 680 is required for 107 percent home loans.
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