The low buzzing economy had many of us cash-strapped with the result that we had to put our dream to build or own a house on the backburner. Forget financing a house, even coming up with the down payment seemed far fetched. Or so we thought. In reality, however, that need not be the case.

The market is buzzing now with 100% financing. A lot of mortgage lenders are now offering zero-down payment mortgage schemes to borrowers who have very little liquidity to make a down payment but have a good credit standing.

What is 100% financing?

A 100% financing mortgage is one where you do not have to produce a down payment. These mortgages are almost a boon to people who are suffering from financial crunches and difficulties in arranging even for a down payment.

However, to qualify for availing this kind of financing, you must have a good credit score. Also, you would have to pay a slightly higher interest on 100% financing mortgages since the lender is undertaking a risk. The higher interest compensates him for the risk assumed.

What are the benefits of 100% financing?

1. The first and the most apparent one is, of course, freedom from down payment. Apart from the option of 100% financing, there is another option called the 80/20 financing which would finance your mortgage with two loans. Your first mortgage would be for 80 percent of the purchase price, and you will use a second “piggy back” mortgage for the remaining 20 percent.

2. 100% financing also gives you the benefit of tax savings as payments against home equity loan are tax deductible.

3. You can also save a bundle on your rent. If nothing, rest assured that instead of throwing your money away on rent, you can build equity in your own home.

4. Private mortgage insurance can add hundreds of dollars to your mortgage payment. And worse, they protect only the lenders. Under 100% financing, you will generally not be required to pay for private mortgage insurance.

However with 100% financing you will have to shell out a little more than the regular mortgages towards higher interest rates, closing costs, and lender fees. Also, it is more difficult to get 100% financing than the regular loan. There are tighter qualifying criteria for this type of loan. A 100% financing mortgage is one where you do not have to produce a down payment. These mortgages are almost a boon to people who are suffering from financial crunches and difficulties in arranging even for a down payment.

However, to qualify for availing this kind of financing, you must have a good credit score. Also, you would have to pay a slightly higher interest on 100% financing mortgages since the lender is undertaking a risk.

Also, remember that when you get a 100% financing loan, you are at risk of negative equity. This means that if the value of the house you got 100% financed falls, the lender may demand extra fees from you.

For more information, you may contact:
Allegro Mortgages Corp. – Best Broker for All Your Financing Requirements
(416) 987-0008
Email:info@amortgages.ca

Author Bio: Check out www.amortgages.ca for more information on 100% financing and Mortgages Loan.

Category: Finances
Keywords: best mortgage rate, mortgage, mortgage broker, mortgages in Toronto, mortgages in Ontario, mortgage