Quite a title-grabbing headline, huh? Well, it is true; 100% mortgages are starting to make a return.

The last 100% mortgage fizzled out in 2008 as the credit crunch and recession hit the world. Sadly, finance was arguably mis-sold pre-2008 as lenders would offer 125% mortgages to those who could not afford payments over the medium term. We all know the results of this lending policy!

With 100% mortgages gone, borrowers had to find a minimum 10% deposit since 2008 and were penalised with loaded rates where lenders took risk into account. Thankfully, in recent times the gap closed slightly, making it viable for some fortunate First Time Buyers to afford a smaller deposit and monthly repayments. The Bank of Mum and Dad helped many fortunate first-time buyers.

But what about those who didn’t have this help available and had no choice but to become a tenant?

Historically, Shared Ownership and Help-to-Buy schemes were available, but choices on where and what you could buy were generally outside the buyer’s control; for example, to take advantage of HTB, you had to buy a new build home.

The government is presently discussing a future Help-to-Buy style solution, which could take a long while to launch, so in the meantime, lenders are finding solutions to help.

Today, one of our supportive lenders has launched a mortgage product targeting those in the Private Rented Sector.

So long as the applicant is over 21, a first-time buyer and can demonstrate they have paid rent for the past twelve months, along with paying the household bills, then this lender could be the solution for you.

Further to the above criteria, the lender requires the present monthly rent payments to be above the cost of the new mortgage payment. They won’t lend on New build flats either.

But what about the risk-averse borrower who doesn’t want to risk negative equity should the market turn sour?

Generally speaking, when the market turns, the group of borrowers who are worst affected are those who borrow at the higher loan-to-values and don’t have a backup solution. This can result in this group waiting until property prices bounce back, but in the meantime, they become “mortgage prisoners”. There is always a risk to any borrower; historically, time is the cure in this scenario.

However, this 100% mortgage will allow no more than a 5% deposit and over-payments of 10% per annum. These mortgages will be on a repayment method of paying back the loan, so the bounce-back effect coupled with repaying capital will help this situation and reduce the risk.

The lender is highly aware we have a large segment of society who are fed up with paying back someone else’s mortgage, and their solution is a viable one.

We fully expect many mortgage lenders to launch their 100% mortgage solution shortly, so Independent and Expert advice is essential. We would love to help.