Are 99% Mortgages A Good Idea? – HUGE NEWS!

Are 99% mortgages a good idea? It’s a question a lot of people have been asking, ever since it was announced that Yorkshire Building Society have begun offering the product. While many people are excited about the news, others have raised the alarm bells, worrying about a repeat of the 2008 crash. There are good arguments on both sides of this issue, and I think it is important for property investors to understand this complex topic.

If you are looking to buy your first property to live in, you need to understand the opportunities and risks for this kind of product. If you are a property investor, you need to understand the possible impacts on the market 99% mortgages could bring. If you are neither a home purchaser nor a property investor, you need to understand the potential impact on the wider economy. This topic is important to everyone.

In a recent video for my YouTube channel, I sat down with business and lending broker, Kelly Upstaged, who opposes these type of products, to ask are 99% mortgages a good idea? I am a supporter of 99% mortgages, so I took that side of the debate. In this article, I will summarise each side of the issue and let you make your own mind up. If you find the information in this article helpful, please consider sharing it on social media. The more people understand this issue, the better.

1. Are 99% Mortgages A Good Idea? No.

Kelly is a Londoner, and therefore she says she looks at this from a London perspective. She has been looking at house prices, and doesn’t think it makes sense for most people. Talking about average house prices in London, she said “…400k, I had a look at the numbers. 5.99% on a property that's 400k with your 1% deposit, you're looking at about £2,200-£2,300 a month for the mortgage. That's backbreaking for most people”.

Another issue she has with 99% mortgages is that it is giving people false hope. While many people will be able to save the deposit, most will fail the affordability criteria. Those that can meet the lenders' affordability criteria, on the other hand, probably have the means to save for a normal deposit anyway.

With 99% mortgages, it is easier to slip into negative equity, and Kelly predicts that we will see a lot of repossessions in the years to come. Kelly suggests that people take the time to save for a deposit rather than rushing into a mortgage that isn’t right for them.

2. Are 99% Mortgages A Good Idea? Yes.

Kelly raises some good points, but I think she isn’t looking at all the facts. Most people don’t live in London, and many live in places where properties are much more affordable. I know someone who is moving out of London to Stoke-on-Trent because of 99% mortgages. You can buy a property in Stoke-on-Trent for £100k. So if you've got a 99 grand mortgage, and you're paying 6%, that means that you're going to be paying £495 a month. You can put in a lodger to pay for that. You're living free. It is a great deal in that case!

Kelly mentioned the affordability criteria. That’s a good thing. If only people that can afford the product are accessing it, that reduces the chances of default and repossession. While this limits the people that can benefit from this product, it is for good reason.

So are 99% mortgages a good idea? It depends on who you are and your circumstances. 99% mortgages are a tool in the toolbox. They can be used to hammer in a nail or break your fingers. However, used correctly, for the right buyer, they are an amazing idea!

Are 99% Mortgages A Good Idea? And Other Property Questions Answered!

Do you have property questions like ‘are 99% mortgages a good idea’? Come and ask them to a property expert! Join me at my next £1 training event!

On the course, you will learn how to:

Become a property investor using other people’s money so that you can get started straight away
Utilise the 5 different types of raised finance so that you know exactly what to offer and when
Find the perfect properties for the BRR strategy
Recycle your money so that you can ‘rinse and repeat’
Build a power team you can trust, so that you can save time and money
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