Money is difficult to earn, easy to spend, and hard to keep. Keeping the cash rolling all year long is a difficult task for almost anyone these days. To this end, many people take out one or more mortgage on their property to fill their pockets. The basic idea of a mortgage is very simple: get money temporarily in exchange for an equity or stake in some property or possession. The transaction is temporary because the possession is reclaimed by the borrower when the lender is paid back the sum owed. This is the gist of any mortgage, but there are several different ways, in which these mortgages may be structured.
Many mortgages require collateral along with a small down payment as a token of goodwill. Others require full possession of the collateral instead. In some cases, the lender takes over full control of the mortgaged property as security, while in other cases, the property is claimed only in the event of a default. One of the most interesting ways to get money quickly and easily is to opt for a 100% mortgage loan, as it is really simple to obtain.
The idea behind 100% mortgages
The basic concept behind a 100% mortgage loan is very straightforward. As the name suggests, the borrower gives up 100% of the equity. There is no down payment in cash required as the entire possession is offered up as collateral.
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Here are some of the biggest reasons why a 100% mortgage is a good option.
- Convenience: As there is no down payment in cash required for the mortgage, a 100% mortgage cuts through a lot of red tape right from the start. Once the property passes inspection and the documents are drawn up for the loan, the loan amount is disbursed. This level of convenience is quite comforting and reassuring to borrowers.
- Zero cash crunch: Most often people who apply for a mortgage have extreme financial difficulty, as they need the money. In some cases, the need for cash is more desperate as compared to other cases, and this is where 100% mortgages are an absolute boon, as most loan applicants find these mortgages extremely useful.
- Greater valuation: The most obvious advantage of a 100% mortgage loan is the fact that it guarantees a higher risk. Giving up full control of the equity sends a message of confidence that makes the equity conform to the requirements of most banks and financial institutions, even for a higher risk. Simply put, more equity means more money.
The best thing about 100% mortgages is that it balances out both ends of the transaction. The borrower gets more money and a much better timeframe while the lender gets a bigger piece of the action in one deal. Both parties are happy with their involvement in the transaction. In addition, the property is mortgaged, and not sold off. Therefore, the borrower can easily reclaim full possession once the loan is paid off in full.
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