One
Hundred Percent Mortgage
Since
the credit crunch these types of product are
regarded as too high risk and are no longer
available.
The
old hundred percent home loan mortgage was used
for purchase and remortgage:-
One
had to be very cautious with borrowing 100%
of the value of the property or over because
if you have financial problems then there potentially
is no equity within the property to assist you
and if you are consolidating unsecured debt
you will be converting to secured debt over
normally a longer term on your home.
As
with all lending discussions care must be taken
with this product as it had to suit current
and future needs. For example what would happen
if you were to lose your job, got divorced or
you became sick long term. Have you considered
that house prices could go down which is exactly
what occurred in the UK in the early 1990s.
The situation of falling house prices and the
need to move home would be very daunting with
a recent 100% loan where there is no equity
in the property or worst still negative equity.
How would you cope?
This
was a product that needed a lot of respect and
understanding.
Unfortunately too many people are determined
to borrow past they safe margin and incur too
much debt that cannot be serviced in the future,
what looked like a dream property can turn into
a nightmare if care is not taken.
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