A 100% mortgage allows you to borrow the full amount of the sale price of your house or flat. This type of mortgage invariably comes with a higher interest rate. The advantage of these mortgages is that they allow you to gat the all important foot on the property ladder. A major downside is that should house prices fall you may end up with a mortgage that is larger than the amount you would get for your home if you were to sell.
Some lenders will still require you to take out a Mortgage Indemnity Guarantee or MIG on a 100% mortgage. This is a one-time insurance payment and it amounts to paying to cover the lender in case they need to repossess your property on the grounds of mortgage arrears at some time in the future. MIG's can cost many hundreds of pounds and many lenders will 'helpfully' allow you to add the cost of the MIG onto your mortgage. What this means is that not only are you paying insurance on behalf of the lender (as well as having your own buildings and contents insurance and maybe some form of mortgage payment protection), but you will also be paying interest on the MIG to your lender through your monthly repayments!
Think very carefully before you choose this path and check your mortgage offer thoroughly before signing.
