100% Mortgages are Back With Some Rather Large Catches

100% Mortgages are Back With Some Rather Large Catches

Although it’s not too difficult to get a higher loan-to-value deal such as 85% and 90%, the days of 100% mortgages seemed long gone. It seems they are now emerging from the shadows, the only catch is you need to be super-wealthy to get one.

100% mortgages are far from being a new product to the market. Towards the beginning of this century, they were prevalent, but something called the financial crash in 2008 quickly put a stop to them. Back in those days, when people were super-confident in the property market, there were even products classified as 125% mortgages which today almost defies belief!

When we look at last year compared to the previous five years, we see a marked increase in higher loan-to-value mortgage products. Data shows that there’s been a 130% increase in 95% LTV mortgages during this time.

Some lenders were also inching ever closer to the 100% LTV mortgage with Lloyds the first to do so, launching it’s ‘Lend a Hand mortgage’ in January of last year, soon followed by Halifax. However, this required a loan to be taken out by a family member to be successful.

If you think that those products sound ideal and you want one; we have some disappointing news. Both have since shut their doors to new applicants. Also, data from Moneyfacts showed the total number of mortgage products on the market had fallen 51% since the start of March.

Where can you get a 100% mortgage?
Mortgage Broker Enness Global has seen some 100% LTV products return to the market via private banks in Switzerland. But, here’s where the catches start to come in, it does require the individual to leave their ‘deposit’, typically 35% of the loan amount creating a net position of 65%, under management with the bank.

And, if you’re happy with this, the next catch is the minimum loan size is £5million, with rates in the region of 1.75% dropping to sub 1.5% if the assets under management with the bank exceed the £10m mark.

Group CEO of Enness Global Mortgages, Islay Robinson, explains: “This type of product does offer benefits for those willing to do the leg work to secure it. In essence, the money they invest with the bank lands on the other side of the balance sheet. So they will have the mortgage borrowing on one side, and the money placed with the bank on the other side.

It then becomes a win-win for both the bank and the client in the sense that it provides the bank with some money to play with, in what are tough financial times, while the client’s money keeps on earning for them instead of being ‘dead’ money tied up in a deposit.

The real cherry, however, to such a structure is a barrier for Inheritance Tax. For those at the very top end of the wealth ladder, succession is an increasingly central consideration.”

In reality, I can’t see many high-net individuals going through the rigmarole of moving assets around to place them under the management of a bank to secure a 100% mortgage.

Technically speaking, 100% mortgages are indeed back with us, but not in the way we remembered them.

Read more property-related articles in our dedicated section here.

100% Mortgages are Back With Some Rather Large Catches 4


Paul Godbold

Founder, Editor-in-Chief

Paul is the owner and editor-in-chief of Luxurious Magazine. He previously worked as a fashion model, was in the British Army and created companies in the technology, venture capital and financial services sectors. In addition to writing, he also proofs, edits, designs, lays out and publishes all the articles in the online magazine. Paul is a full member of the Chartered Institute of Journalists.

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