02 Jul 2022

Do no deposit mortgages exist?

No Deposit and Second Home Purchase

As a short answer to the question, no deposit mortgages do exist, but they are not recommended and are rare. No deposit mortgages can be tricky to both borrowers and the lending companies. This is because they have higher interest rates and are harder to be approved for.

When a borrower does not have a deposit ready for a home, these are red flags to banking and credit institutes. Since no deposit means that there is no money down on a home, this can show a credit institute that a homebuyer is not ready for the responsibilities that come with repaying a large thirty year home loan.

Since it is a big risk for lenders, these institutes will ask for something like high repayments or a higher interest rate. It is best to use a guarantor or other property as equity. However, be careful using a guarantor that is not close or trustworthy. These people should guarantee the institute that the repayment will be done completely and on time.

It is important to note that anyone connected with a mortgage is at risk for issues pertaining to credit scores. If a repayment is missed, this falls on the co-borrower and guarantor. 

No Deposit Mortgage Conclusion

Having a deposit is a sign of trust between a borrower and a credit institute. When there is no trust, it is hard to qualify for a home loan. Thankfully, there are many different options, including no deposit mortgages! Mortgage House experts are ready to assist interested homebuyers in the process by explaining the many different mortgage types!

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