HBW KNOWLEDGE / BUYING
Buying without equity: what lenders consider
Financing the whole purchase price differs from financing every transaction cost as well. Both require particular care over affordability and reserves.
One hundred per cent of what?
If the whole property price is financed, purchase costs may still be paid from your own funds. If those are also borrowed, the loan exceeds the purchase price. Labels such as 100% or 110% financing mean little without identifying the reference amount.
The loan-to-value ratio follows the lender’s valuation method. It is not automatically the loan divided by the purchase price.
The financing requirement increases
| Simplified example | Amount |
|---|---|
| Purchase price | €400,000 |
| Assumed transaction costs | €40,000 |
| Borrowing needed without own funds | €440,000 |
Modernisation and reserves may add more. The lender decides whether to offer this borrowing; a high salary alone does not guarantee approval.
Risks that deserve particular attention
- A higher loan amount and potentially higher interest rates.
- Less room for repairs or an income interruption.
- An early sale may produce less than the remaining debt.
- Low starting repayment shifts more repayment into the future.
Compare practical alternatives
A lower purchase price, additional saving time or evidenced family support may change the requirement. Examine specific scenarios including the total cost and an adequate reserve before committing to a purchase.
Frequently asked questions
Is a mortgage without equity impossible?
Not necessarily. It depends on creditworthiness, the property, security and lender criteria. A blanket promise would not be reliable.
Does another personal loan count as equity?
Borrowed money is another liability and must be disclosed. Its payment also reduces household capacity.
What does this mean for your plans?
Discuss your purchase price, own funds and intended borrowing with us.
Request a financing review ↗