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What You Need to Know About a No Money Down Mortgage Loan

A no money down mortgage loan is perfect for people who want to get out of the rut of renting. Renters can afford mortgage payments; after all, they pay a similar amount in rent each month. However, after paying utilities and other bills they are often left with little to save towards a mortgage deposit.

Because of the economic climate, 100-percent mortgages are no longer available in the United Kingdom. However, there are financial institutions who offer deals that are close to the no-deposit-needed mortgage.

The Royal Bank of Scotland offers a 95% mortgage, with a starting interest rate of 5.79% depending on status. Current lenders and people who are self-employed all qualify to apply for the loan. The interest you pay depends on the loan to valuation ratio. If you plan to borrow 95% of your mortgage, you will be looking at a higher interest lending rate of around 8.95%.

The Yorkshire Bank also offers a 95% mortgage, with a maximum term of 40-years available. Strict conditions apply, however, their interest rate is much more competitive starting at 6.99% fixed for three years with a potential finishing rate of 5.5%.

There is not much choice available for people looking for this type of mortgage. Because of the economic downturn, banks are reluctant to offer a 100% mortgage because of the increased risk of a person defaulting. Unfortunately,less competition between banks means less competitive prices for the customer.Before making a decision on your no money down mortgage loan, it is important you consider the disadvantages as well as the advantages. While the deposit you pay may be relatively affordable,you may well be paying a significantly higher interest rate for the duration ofthe mortgage.

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