The 100 Plus Club
The rise in borrowing highlights the problems faced by first-time buyers in the face of rising interest rates and house prices.
Many first time buyers are unable to save for a deposit and are now considering 100%-plus mortgages as the only way of getting on the property ladder - it?s a dilemma as to whether they should save for a deposit and risk house prices rising further, or go for a 100% plus mortgage. Some are borrowing extra to simply be able to afford the various fees incurred when buying (stamp duty, solicitor?s fees, mortgage arrangement fees, etc) and also to furnish their new property.
Put simply 100%-plus (or loan-to-value loan deal) are normal mortgages with an unsecured loan attached with both loans charged at the same rate of interest, although it is usually a high rate of interest due to the nature of the loan.
The 100% plus mortgage products are based on ?affordability? assessment and this means that applicants with a strong credit profilecan borrow up in excess of fice times their income
But some commentators are concerned that some homeowners could be stretching their finances too far and burdening themselves with debt and leaving themselves open to huge financial risks should the price of property slump and leave them with a property in negative equity. Many view 100% plus mortgages as a last resort for mortgage borrowing but 100% plus mortgage can be seen as a real solution for first-time buyers who, without them, would stand very little chance of entering the house market.
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