How to get a mortgage with no deposit

What is a no deposit mortgage?

A no deposit mortgage, also called a 100% mortgage or 0 deposit mortgage, lets you buy a home without putting down any money upfront. That means the lender covers the full property value, known as a 100% loan-to-value (LTV) mortgage.

These deals are rare, but they can be a lifeline for first-time buyers struggling to save a mortgage deposit.

How much deposit do you usually need to buy a house?

Most lenders ask for at least a 5% deposit, meaning you’d need a 95% mortgage. So, if you're buying a £200,000 home, you’d need to save at least £10,000 upfront.

How do mortgage deposits work?

House deposits are worked out as a percentage of the property's value that you pay for with money you have saved up. You must then borrow the rest as a home loan or mortgage to cover the rest of the purchase price.

Generally, the bigger your deposit, the better interest rates you have available.

The most competitive interest rates are usually for those who have at least a 40% deposit to put down (60% LTV) - so £80,000 for a house worth £200,000.

Can I get a mortgage with 0% deposit?

Although rare in the UK, it's not impossible. Most 100% mortgages disappeared from the market after the 2008 financial crisis, but Skipton Building Society brought them back with a 100% LTV mortgage designed to help renters become first-time buyers.

You’re more likely to get approved for a no deposit mortgage if you have a good credit score, low levels of debt and a regular income. Lenders will also want to see evidence that you can afford your monthly repayments.

Are no deposit mortgages risky?

They can be if house prices started to fall. For example, a 100% mortgage on a property that cost £100,000 would mean you owed £100,000 to your lender. If the property value then dropped to £90,000 it would be worth less than the amount you owe.

If you needed to sell the property, the amount you are likely to get for it would not pay off your mortgage in full and would therefore leave you in debt.

100% mortgages and guarantor mortgages

If you can’t get a 100% mortgage, another option is a guarantor mortgage. This usually involves a family member or close friend who owns their own home agreeing to support your mortgage. They won’t make monthly payments, but they must cover them if you can’t.

There are two common ways a guarantor can offer security:

• Using their home: The lender places a legal charge on your guarantor’s property. If you fall behind on repayments, the lender could recover money from them, or in extreme cases, repossess their home.

• Using their savings: Your guarantor deposits a lump sum into a special savings account with the lender. That money is locked away and can’t be withdrawn until you’ve repaid a certain portion of your mortgage.

While this setup can help you get on the property ladder, it also puts your guarantor’s assets at risk, so it’s a big decision for everyone involved.

If you're unsure which route to take or can't find the right deal, consider speaking with a mortgage broker. They can help you explore all available options based on your circumstances.