A no deposit mortgage or '0 deposit mortgage' is when you get a 100% mortgage. It means the loan you get from the bank or building society covers the whole cost of buying your property. With a 100% mortgage you don't need to put any deposit down.

It might sound like a no deposit mortgage would be great for first-time buyers. But actually, if you're a first-time buyer, you're unlikely to be offered a 100% mortgage. They're mostly suitable for existing homeowners who already have a mortgage.

How does a 100% mortgage work?

If you want to get a mortgage with no deposit, you're asking the lender for a loan for the full value of your home.

So, if your property costs 150,000, a '0 deposit mortgage' would mean you're borrowing the full 150,000 from the lender.

When you choose a mortgage, each product has a loan to value ratio (LTV). That's the percentage of your property's value that the mortgage covers. For most mortgages, the LTV is less than 100%. So you usually have to cover the rest of the property's value with your own funds.

If you're not getting a 100% mortgage, you'll have to make up the rest of the property's value with a deposit. Or, you could use equity from your current home (that's the amount of money you have tied up in it). The more equity you have in your home, the lower the LTV you can get, and the better the deal you'll be offered.

The very best deals are offered to buyers who can put down a deposit of 25% of the purchase price of the property. The LTV on a mortgage like that is 75%.

What do I need to know if I'm thinking of getting a 100 percent mortgage?

There are some important things to understand if you're thinking of getting a 100 percent mortgage.

  • Not all lenders offer 100% mortgages. Most mortgage lenders will only loan 95% of the property's value, which means you need a minimum 5% deposit. That's called a 95% loan to value (LTV) mortgage.

  • Lenders see 100% mortgages as risky. That's because you aren't putting in any of your own money into the property. All the risk is theirs.

  • You could get into negative equity with a 100% mortgage. Negative equity is when the value of your home goes down, and you end up paying off a loan that's more than what your home is worth.

  • Interest rates on 100% mortgages are usually higher because they are seen as a bigger risk.

  • 100 percent mortgages for first time buyers aren't likely. That's because first-time buyers are already considered high risk. Throw a 100% mortgage into the mix, and it doesn't feel like a sensible arrangement to a lender. So if you're a first time buyer, no deposit is going to hinder you in your quest to get a mortgage. You'll need to save up a deposit to help you get on the housing ladder. The alternative is to find a guarantor.

So, if you're thinking of buying a house with no deposit, make sure you understand what you're doing. And shop around, too, because 100 percent mortgages don't always offer the best deals.

How to find the best 100 percent mortgage, UK wide

You can use our comparison tables to find the best no deposit mortgage for your circumstances.

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

The interest rate you're quoted for a 100% mortgage is likely to be higher than the interest rates in our other comparison tables. For example, you'll get better rates on first time buyer mortgages or traditional remortgages. So you'll need to factor that into your budget.

Are 100% mortgages a good idea?

It can be tempting to consider a 100% mortgage. You don't have to put up any money up front, and you get a chance to own your own home.

But you might be better off trying to save up a deposit of at least 5% before you approach lenders. That's because lenders offer much better deals to buyers who can show a history of financial discipline.

Lenders like to see borrowers put a deposit - also known as equity - into the property. It lowers the risk for them that you'll default on your mortgage.

Saving up for a deposit can be challenging. It could be because house prices in the area you want to live in are high. Or maybe you're finding it hard to set aside enough surplus income on a regular basis..
That's where the government's Help to Buy scheme for first time buyers can be useful.

But even with Help to Buy, no deposit at all won't help. To make use of Help to Buy, you'd need to save up a small deposit of 5%. The government then adds a further 20% equity loan (or 40% in London) to your deposit. This equity loan means you'll have a more reasonable LTV that will make lenders be more willing to lend to you at a better interest rate.

There's no interest or fees on the loan for the first five years of owning your home. You'll need to repay the amount you borrow from the government within 25 years, or when you sell the house. Or, you could pay it back before then.

The current scheme's only due to run until March 2021, but a new one's been announced which will run from April 2021 until March 2023.

Are first time buyer no deposit mortgages available?

While the technically the answer is yes, you'll only be able to do so if you've got a guarantor.

A guarantor is a friend or family member who promises that they'll pay your mortgage if you can't.

A guarantor uses their own home as security against the loan. That means their property could be at risk if you defaulted on the mortgage payments. So they're making a huge financial commitment on your behalf, and you'll need to talk to them about whether they're willing to do this.

Even if you do have a guarantor who's willing to help you, some lenders will still ask you for a deposit. The bigger your deposit, the better the rates you'll be offered.

While you can get a guarantor mortgage as a first-time buyer, it's still probably a better idea to save up a deposit. You should save up as much as you can. The more you have, the better the rates you'll unlock. You'll have access to more mortgage lenders and more potential deals.

Learn more about guarantor mortgages

Who can get a 0 deposit mortgage?

If you're looking for a 100% mortgage, you'll need to bear in mind that they're usually only only offered to people who already own their own home. That means they're not really available to first-time buyers (unless you have a guarantor).

If you want a no deposit mortgage, bad credit isn't going to help you, either. You're too much of a risk to lenders. So if you were hoping to buy a house with no deposit and bad credit, you might need to rethink the idea.

A no-deposit mortgage is also off limits to people in negative equity.

The most likely people to get a 100 percent mortgage are homeowners who are remortgaging.

Mortgages with an LTV over 100%

If you've bought a house or flat that's fallen in value after you've already arranged the mortgage and moved in, you might need a mortgage with an LTV over 100%.

If this happens, you're left paying interest on a loan that's larger than what the property's currently worth. This is called negative equity.

Negative equity means that if you sold your property, you'd owe the bank more than you'd got for it. You might want to consider remortgaging to get a better rate.

Over time, the value of your home may rise. You could continue to pay your mortgage instalments as normal and wait for this to happen.

But if you have negative equity in your house and need to sell it, you do have several options. For example, you could negotiate with your lender to change your mortgage, or you could think about letting your house out.

Learn more about your options if you have negative equity.

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.