100% mortgages- really so bad?
- Thread starter SueWho
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LDFerguson
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Under the notional conditions you outline, there's nothing inherently wrong with a 100% mortgage - it's a repayment mortgage like any other.
However, the discipline of saving up a deposit is a useful one from a budgeting point of view, and to give you a better understanding of the long-term commitment that is a mortgage.
However, the discipline of saving up a deposit is a useful one from a budgeting point of view, and to give you a better understanding of the long-term commitment that is a mortgage.
moneyhoney
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As someone who got a 100% mortgage, I have to agree with this. I bought my apartment at the end of 2001 and as a staff member in a bank, I got a 100% mortgage. I also got the old first time buyers allowance so didn't need any money for furniture. In fact, all I had saved was my solicitors fees.
I was lucky that I never got into negative equity (so far!!) but I managed to buy an apartment without ever having to take responsibility for my spending/budgeting.
Brendan Burgess
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It is more a problem for the lender than for the borrower.
Property prices have fallen, so their security is much weakened. So far, they have not lost much on 100% mortgages, but they might yet.
100% mortgages were also a problem in that the general availability of easy credit pushed up house prices.
Brendan
Property prices have fallen, so their security is much weakened. So far, they have not lost much on 100% mortgages, but they might yet.
100% mortgages were also a problem in that the general availability of easy credit pushed up house prices.
Brendan
Interesting views. I am eligible for AIB Young Professional Mortgage (100%) as I am an accountant, very secure employment (I genuinely work in a recession proof industry), well able to afford the monthly repayments by myself (no rental income or lodger of any kind) even if rates went up to 2008 peaks. I have a very sensible track record with loans and savings. I just wouldn't have more than 3 or 4% deposit saved. I'm interested in buying a genuine home for my long term future (4 bed semi) with no intentions to resell/ upgrade/make a quick buck.
So my question is: if the price is right, is it safe to say I'm not being totally daft or irresponsible accepting a 100%?
So my question is: if the price is right, is it safe to say I'm not being totally daft or irresponsible accepting a 100%?
moneyhoney
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Yes very recession proof
Sue didn't say she is an accountant/auditor - she could be an accountant in ANY industry. If you don't have anything constructive to post, don't bother.
G
Guest128
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LOL! How many if/buts/supposings/assumings do you need to include before this becomes a rhetorical question?
100% mortgages drove prices way up and were a disaster waiting to happen, I dont see why anyone would want one, especially now. Even the newly proposed BOI lending of five times your salary is too much in my opinion.
dereko1969
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yes but if someone can do that job cheaper in india/poland/estonia then your job may not be quite so bullet proof
I don't think Sue is asking for your opinion on the security of her own job -
Some people on here really do have an opinion about absolutley everything!!
I agree 100% with Grace80 and moneyhoney. Surely the moderators can do something here. I for one am getting to the point where I will stop using AAM. Too often I find what appears to be an interesting thread but when I drill into it I find too many posts by people who have nothing to contribute. A quick scan of this thread and you will know who they are.
AAM was a super resource before the recession and probably even more important now. But it seems there are loads of people on AAM who are looking for any opportunity to stick their boot in - when it comes to property, jobs etc. I dont think anyone in this country could by unaware of the jobs sitatuation, property prices etc and do not need reminding when they add a post looking for information.
AAM was a super resource before the recession and probably even more important now. But it seems there are loads of people on AAM who are looking for any opportunity to stick their boot in - when it comes to property, jobs etc. I dont think anyone in this country could by unaware of the jobs sitatuation, property prices etc and do not need reminding when they add a post looking for information.
One of the very good aspects of AAM is that there is freedom of speech but it is moderately moderated so you tend not to have the TABLOID HEADLINES!!!!!!!!!!!!!!!!!!!!!!!!!! comments that you get on other boards. However, another very good aspect of AAM is the extent to which people will probe on what initially ( but later not) seems to be a very straightforward question.
I don't think that any job is recession proof so, despite what OP says, I think it is a very valid point to make. I've often been interested on AAM to hear an opinion that I don't like or had not thought of.
And I do think that people who post on an anonymous board have to be willing to take on board all comments whether they like them or not.
Its the deal.
mf
I don't think that any job is recession proof so, despite what OP says, I think it is a very valid point to make. I've often been interested on AAM to hear an opinion that I don't like or had not thought of.
And I do think that people who post on an anonymous board have to be willing to take on board all comments whether they like them or not.
Its the deal.
mf
dereko1969
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Her assumption that she is in a recession proof job was queried as she herself posited that using a 100% mortgage was based on the assumption that the person remains in employment.
We live in very uncertain times and when someone asks about taking out a 100% mortgage it's important to stress-test the repayments on perhaps having to take a major salary cut or indeed the loss of a job when they know that they will have no equity in the house should the worst come to the worst and they have to sell or face repossession.
I'm certainly not trying to stick the knife in or anything like that, i'm trying to point out that assumptions in these times don't always hold true.
I think the point Derek is making is that no job is "recession proof" anymore, heck, im a nurse and im looking over my shoulder.
Fair point, no point in givng 100% mortgages to ppl who have no proof that they can save or economise and after paying 1% off the loan may suddenly be unemployed.
It's the real world, anyone can hurt their back etc and never be able to work again, what do you do then with a whopping 99% mortgage? The should have been stopped by the ppl in charge.
Fair point, no point in givng 100% mortgages to ppl who have no proof that they can save or economise and after paying 1% off the loan may suddenly be unemployed.
It's the real world, anyone can hurt their back etc and never be able to work again, what do you do then with a whopping 99% mortgage? The should have been stopped by the ppl in charge.
S
Senna
Guest
A persons job security isn't really a factor when considering LTV's, you could buy a house and have an LTV of 20%, but if your out of a job the repayments will be tough.
A lower LTV is security for the bank AND for the house holder, if you have more equity in the house, it means it can be sold with price flexibility. With a 100% mortgage there is little or no flexibility, the house needs to be sold for equal or greater than purchase price (assuming little time has passed).
In the current falling property market, a 100% mortgage is guaranteed negative equity.
100% mortgages were a fuel to the property explosion, if your not able to save the deposit then you cant afford the house, no-one has a god even right to own a house, something that was forgot during the boom and still unknown to some people today.
A lower LTV is security for the bank AND for the house holder, if you have more equity in the house, it means it can be sold with price flexibility. With a 100% mortgage there is little or no flexibility, the house needs to be sold for equal or greater than purchase price (assuming little time has passed).
In the current falling property market, a 100% mortgage is guaranteed negative equity.
100% mortgages were a fuel to the property explosion, if your not able to save the deposit then you cant afford the house, no-one has a god even right to own a house, something that was forgot during the boom and still unknown to some people today.
In this very particular scenario you outline there is nothing daft or irresponsible in accepting a 100% mortgage.
Whether it's advisable is another thing. A couple of things that spring to mind - you say you have good track record on loans and savings. Then why have you only a 3% deposit saved.
What if interest rates went to 15%, what if you had to take a pay cut of 10%, what if your job was relocated, these may sound way off to you but you should consider all eventualities. Can you tell us your salary range and the mortgage amount. Also what term is this mortgage over. You'll get better advise if you give more information.