100 Finance Home Loan

A mortgage loan that does not require any down payment is a 100% finance home loan. It can also be called a no deposit home loan. Usually a loan requires a down payment of about 5 to 10 percent of the value of the house. Anyone who cannot afford to or who does not want to pay up such down payment should ask for a 100% finance home loan. Those who suddenly need a new home or those people with no personal savings and those couples who are newly married and are starting to build a home are good candidates for a loan of this kind. One merit of a 100% finance home loan is that you can immediately get your house and you do not have to save for months and years to be able to pay the down payment. You only have to arrange for the amount that is required for the fees incurred in applying for and obtaining the loan. There are even loans, which will provide you funds for furnishing your house and for closing on the property you are buying.

However, any person applying for a 100% finance home loan must have a high credit score. A credit score is a number that shows your credit standing. It is determined on the basis of your debt profile and bill paying history. The credit score helps your lenders assess how your credit pattern with your lender is. It helps determine your capability of returning your loan. Lending institutions also use the credit score to decide the rate of interest and scheme of payment they should offer you. To have a good understanding of your credit profile, it is essential that you keep track of your credit score and see that you maintain a good score. The credit score is calculated using a mathematical model. The factors considered in calculating your credit score are currents debts, the time period for which you have had these debts, past as well as present payment patterns and the kinds of credit you are using and the kinds available to you. The figure thus obtained is compared with the history of payment of other borrowers and your position is calculated.

A 100% finance home loan puts the house you buy at a negative equity risk. This is when the house value depreciates. The lending company, in such a case, will ask for extra charges. If the additional fees are not complied with, the lender can sell the borrowers collateral. This in turn lowers the borrower’s credit score