Mortgages

[numnum]

I had a mortgage years ago then sold the property. It was a 100% mortgage so i never needed any savings beforehand

Now I'm looking into buying again and things seem to have changed a lot in a few years.

I spoke to a financial advisor and he said most people now adays would need 10-15% savings before most banks/advisors would speak to you.

It would be interesting to know if people have managed to get a mortgage without huge savings, if its even possible now?

My partner is on £32,000 a year and I have my own business. I dont earn a great deal at the minute as I'm a housewife so my hours will change over the years

The house we're looking at is £130,000 and hoping it will go down in price

[boxtops]

So many people can't afford the deposit, numnum, that's partly why so many younger people are still at home with mum and dad, or have chosen to rent instead at the moment.

[numnum]

i also spoke to a friend and she had spoke to the same adisor but she said we'd be best to look around and he advised them similar and they got a better deal through the bank

[Buenchico]

It's the fact that the house might go down in price that's preventing you from getting a 100% mortgage (or anything close to it).

Let's suppose that a bank lent you £130,000 to buy the house but, shortly afterwards, the housing market collapsed and your house was only worth £100,000. If you then lost your job and the house was repossessed, the bank would only get that £100,000 back. You'd still owe them £30,000 but the bank would have virtually no chance of getting it from you, so they'd be massively out of pocket.

In the past, banks gambled on the housing market always going up (or, at worst, remaining stable). So they were prepared to offer 100% mortgages. Then everything went wrong and the banks made massive losses, forcing some into bankruptcy and many others into seeking government help. That's why we're still struggling to come out of a recession and the UK economy is nearly bankrupt.

As a consequence of the world-wide economic collapse caused by the rash decisions of bankers, all banks are now far more cautious about lending money. That's not solely a decision for bankers. If any UK bank was to now offer loans which exceeded what the value of the property might later fall to, the Government (through the Financial Services Authority) would almost certainly seek to withdraw that bank's licence to operate.

So 100% mortgages (or anything approaching that figure) have now gone forever. In order to guarantee that they'll never make a loss, most banks would prefer mortgage applicants to have a deposit of at least 20% (because house prices might easily fall by that much, if not more, in the event of a 'double dip' in the economy). But they can't exclude too many borrowers (otherwise they won't make any profits), so they might consider 15% or, if the applicant is in a particularly secure job, possibly 10%.

Chris