A 100% mortgage is one where the loan you receive from the bank or building society covers the whole cost of buying the property.

If you are a first time buyer it's unlikely that you'll be offered a 100% mortgage - instead they are mostly for existing homeowners who already have a mortgage.

Here are some important things to understand about 100% mortgages:

  • Not all lenders offer 100% mortgages. Most mortgage lenders require you to have saved up a deposit of at least 5%, making your loan a 95% mortgage.

  • Lenders see 100% mortgages as risky because you haven't put any of your own money into the property - the risk is all theirs.

  • If the value of your home falls, you'll be paying for a loan that costs more than your home is worth. This is known as negative equity.

  • Interest rates on 100% mortgages tend to be higher because they are regarded as higher risk.

How do 100% mortgages work?

When you are applying for a 100% mortgage, you are asking the lender for a loan for the full value of your home.

For example, if your property costs 150,000, a 100% mortgage would let you borrow 150,000 from the lender.

The percentage of your property's value that the mortgage covers is called the loan to value (LTV) ratio. Most mortgages have an LTV of less than 100%, so you usually cover the rest of the property's value with either:

  • A deposit

  • Equity in your current home, which is the amount of it you own yourself

  • The more equity you have in your home, the lower the LTV and the better the deal you will be offered

  • The best deals are offered to buyers who can put down a deposit of 25% of the purchase price of the property

How to find the best 100% mortgage

If you are looking for the best 100% mortgage, you can use our comparison tables to find the best deal.

To find the best 100% mortgage, look for a loan that has low fees and a low set-up cost or arrangement fee.

The interest rate that you will be quoted will most likely be higher than the interest rates in our comparison tables for first time buyer mortgages or traditional remortgages, so you'll need to factor that into your budget.

Save up a deposit and get a better mortgage rate

Although you might be interested in finding a 100% mortgage, you really should try to save up a deposit of at least 5% before you approach lenders. That's because lenders will offer much better deals to buyers who can show financial discipline.

Lenders like to see you put a deposit - known as equity - into the property as it lowers the risk for them that you will default on your mortgage.

If you are struggling to save up a big enough deposit - because house prices are high in the area you want to live in, or because you are finding it hard to set aside enough surplus income - then you could consider the government's Help to Buy scheme.

You need to save up a deposit of 5% to use Help to Buy, but then the government adds a further 20% equity loan (or 40% in London) to your deposit. This means you need a much smaller mortgage and you'll have a beneficial LTV with a good interest rate.

Can first time buyers get a 100% mortgage?

Yes, but only with a guarantor who could be a friend or family member. Your guarantor must promise that they will pay your mortgage for you if you are unable to do so. Their own home could be at risk if you default on your mortgage repayments so it's important to talk through the financial commitment that you are asking them to make.

Even if you have a guarantor who is willing to help you, some lenders will ask you for a deposit, and the bigger you deposit you have, the more favourable the rates will be that you are offered.

While arranging a guarantor mortgage is possible, it's still probably a better idea to save up as large a deposit as you can. That way, you unlock better rates and have access to more mortgage lenders and many more potential deals. Your interest rate is likely to be lower, too.

Can I get a 100% mortgage?

If you are looking for a 100% mortgage you should bear in mind that they are usually only offered to people who already own their own home (i.e. not first time buyers) and to people who don't have any negative equity.

They are most likely to be offered to homeowners who are remortgaging.

Read our guide about getting a mortgage with no deposit to find out more.

Mortgages with an LTV over 100%

You may need a mortgage with an LTV over 100% if you bought a house or flat that has fallen in value after you have arranged the mortgage and moved in.

You are then left paying interest on a loan which is for more than the property is currently worth.

This is known as negative equity because you would owe the bank more than you would get if you sold your property. You might be thinking of remortgaging to get a better rate.

It may be that the value of your home will rise in time, and you can continue to pay your mortgage instalments as normal.

However, if you have negative equity in your house but need to sell it for personal or other reasons, you do have several options. This could include negotiating with your lender to change your mortgage or letting your house out.

100% mortgage FAQs

Q

Can I get a mortgage without a deposit?

A

Yes, if you have a guarantor. You need at least a 5% deposit for other mortgages, but some come with schemes to help you buy your first home.

Q

How can I save a deposit?

A

Here is how to save up for a deposit. Saving more helps your chances of being accepted and could help you get a cheaper mortgage.

Q

Can I get a 100% interest only mortgage?

A

No, you always need a deposit or equity in your current home to get an interest only mortgage.

Q

Can I get a 100% buy to let mortgage?

A

No, you always need a deposit to get a buy to let mortgage. Most require at least a 20% deposit.

Q

Does my credit record matter?

A

Yes, it will show lenders if you can keep up with repayments on a mortgage. Here is why your credit record matters.

Q

Can I afford a mortgage?

A

Check if you can afford one by working out how much you earn and spend. Compare this to how much buying a home will cost you.

About our mortgage comparison

Q

Who do we include in this comparison?

A

We include mortgages from every lender in the UK. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.