100% mortgages: are they still granted?

If something is clear to us day after day, the real estate market is that it does not like to sit still. Like a roller coaster, the changing landscape of recent years intrigues and confuses both experts and ordinary people. As a result of such key elements as a pandemic, a war with devastating consequences worldwide and widespread inflation, accessing a mortgage of up to 100% is becoming more and more complicated.

These factors, added to the rate hikes imposed by the European Central Bank (ECB) and the unstoppable rise of the Euribor from 2022 to now, have generated a change in financial conditions. The influence of the alterations has not taken long to reach the mortgage applicants, who now face additional challenges to obtain all types of financing, but especially the complete one, 100%.

* According to your financial profile

The truth is that, in recent years, access to financing in Spain has become more complicated. Not only in this type of more complex mortgage loans, but also in the classic ones that move around 80%. However, that does not mean that it is impossible to get them or that the options do not exist.

So where are 100% mortgages today? According to Housfy’s banking business director, David Espiago, this type of financing remains in force despite the circumstances. “Financial entities continue to allow us the possibility of financing 100%, so the product continues to exist and has not undergone changes in criteria compared to last year,” says the mortgage expert.

In the near future, Espiago anticipates that the evolution of the offer of this type of financial product will remain the same as in previous years. Regarding the data for 2022, he predicts a drop in the number of 100% mortgage contracts by the end of 2023, attributing the higher rate as the main reason.

The crux of the matter is highlighted by Espiago: “the policies have barely changed, only that the resulting quotas are much higher.” It must be borne in mind that, with current interest rates, the indebtedness of a family looking to buy a home skyrockets. Consequently, accessing a mortgage up to 100% is impossible for many. And, those who can afford it, simply decline the option because it is not profitable for them to pay the resulting fee.

In the current context, the main challenge is that “the installment of a 100% mortgage is below 40% of the mortgagee’s income,” confirms the Housfy expert.

However, and luckily for many, there are different ways to obtain very useful financing given the difficulty of accessing a 100% mortgage. Next, we review three of the most recommended options by experts.

Although unknown to many, the figure of the mortgage broker can make the difference between obtaining a 100% financing mortgage or not. Espiago states that the 100% mortgage is not something that banks in general advertise or offer. “This is where the broker plays a decisive role, not only to try to obtain this type of loan, but also to guarantee the best conditions for the client”, he assures.

But what exactly is a mortgage broker? In essence, he is a professional who knows all the specific requirements, policies and criteria of each type of loan. Therefore, it is able to efficiently find and procure the most suitable options for each applicant.

The chances of getting a loan that covers up to 100% increase considerably by hiring the services of a mortgage broker. After all, he is an expert who maintains contact and negotiates with multiple banks, so his role will be crucial to facilitate and expedite the process of obtaining the loan. In other words, it acts as a filter to allow those options that are most compatible with the buyer’s financial profile to pass through.

Given the difficulty of accessing a 100% mortgage today, Housfy’s banking business manager suggests another very attractive possibility: renting with a purchase option. This modality offers unique flexibility and would allow the client to “enter to live and month by month reduce the cost that they have to pay to the owner of the house”, explains Espiago.

When we talk about renting with the option to buy, we are dealing with an alternative that benefits both the tenant and the owner. On the one hand, it allows the tenant to live in the house and gradually save for the down payment of the mortgage. On the other hand, this modality offers the owner a way to generate income while ensuring the opportunity to sell his property in the future.

Obtaining 100% financing in a mortgage is an objective that very few people usually reach and with a very solvent financial profile. Especially today, with skyrocketing interest rates and very high credit risk for financial institutions.

For this reason, Housfy’s mortgage expert, David Espiago, recommends lowering the financing to 90%. In this way, the buyer can reduce the amount of money requested from the bank, which translates into more affordable monthly installments and reduced long-term debt. Thus, despite contributing 10% of the value of the property as a down payment, this becomes a more realistic strategy in the current market.

In conclusion, although the current situation of 100% financing mortgages in Spain may seem complicated, it is important to note that it is not impossible to obtain this type of loan. For this, it will be crucial to be informed of the multiple offers in the mortgage market.