How to get a mortgage with no deposit

Getting a mortgage with no deposit might seem like the perfect way to buy a house if you’re struggling to get on the property ladder. But it’s crucial that you know how they work, what the pitfalls are and what other options are available.

Rebecca Gamble Consumer Journalist

What is a no deposit mortgage?

Getting a mortgage with no deposit means the mortgage lender will lend you the entire value of the property. These mortgages are also referred to as Zero Deposit Mortgages, 100% Mortgages and 100% LTV (loan to value) mortgages.

So if you’re buying a property costing £300,000 with a zero deposit mortgage, you would borrow the full amount from the mortgage lender of £300,000. This would cover the full property value from the bank or building society and means you wouldn’t pay any money upfront towards buying your home.

What deposit do I need to buy a house?

When you are looking at how much deposit you need to buy a house, most lenders offer mortgage deals which require at least a 5% deposit to buy a house. A 5% deposit means you’ll need to get a 95% loan to value mortgage. A lot of lenders prefer a 10% deposit and having a larger deposit means you can access a greater range of mortgage deals and lower mortgage rates, making your monthly payments more affordable.

But with a no deposit mortgage you don’t need to put down any deposit.

How can I get a mortgage with no deposit?

There are a number of ways to get a mortgage with no deposit including:

Skipton no deposit mortgage

Skipton Building Society launched a 0% deposit mortgage in 2023 called the Track Record Mortgage that lets you borrow up to 100% LTV. It originally allowed first time buyers to take out a mortgage with no deposit, provided they meet certain conditions. However, it’s now open to people who haven’t owned a property in the UK in the last 3 years.

To access the Skipton no deposit mortgage, you’ll need to have a proven track record of paying rent. It’s available as a 5 year fixed rate mortgage at 95%-100% LTV. This means you can take it out with up to a 5% deposit. But there are some strict criteria to meet including needing:

• Proof of having paid at least 12 months’ rent in a row, during the last 18 months
• Experience of paying all household bills (such as utility bills and council tax) for at least 12 months in a row, during the last 18 months.
• You’ll also need to meet the ‘Household-to-household’ criteria; this means that the same people who are renting now (and have been for the last 12 months) must be the same people applying for the mortgage. So if you’re applying alone, you must have covered the rent and household bills entirely for 12 consecutive months within the last 18 months.
• You can’t get this type of mortgage on a new build flat.

Looking for a mortgage with no deposit? Want to compare it with other mortgage options and see what you can afford? Then use fee-free mortgage brokers L&C. You can start the process online and speak to a broker at any stage – all for free. Let them search the market and find the best deal for you.

How much can I borrow with a guarantor mortgage?

Alternatively, you may be able to take out a 0% deposit mortgage with a guarantor mortgage. Guarantor mortgages may come with slightly different names and have different eligibility criteria. But there are two main types:

1. Use savings as security

Some guarantor mortgages allow you to use savings as security. With these mortgages, the guarantor – usually a parent or other relative – puts cash into a special savings account that is linked to the mortgage. This is typically 5%-20% of the property’s value. The guarantor will agree for the money to be held for a period of time or until the amount you owe falls below a certain threshold. The guarantor can earn interest on the money deposited (although typically at a lower rate than that they may be able to get elsewhere).

If the borrower misses any mortgage payments, the lender may keep the guarantor’s money for longer. And if the lender has to repossess the property and sell it and if they get less than is owed on the mortgage, they may take the difference from the guarantor’s savings.

No deposit Family Springboard Mortgages

Barclays’ Family Springboard mortgage doesn’t call itself a guarantor mortgage, and specifies that ‘Helpers’ aren’t guarantors, but it works along these lines. The buyer can put down as little as 0% deposit. And the Helper puts down 10% of the cost of the property in a linked savings account for 5 years. Providing mortgage payments are kept up this will be returned to the Helper with interest after five years.

While the Halifax Family Boost Mortgage may not be called a guarantor mortgage on its website, it also operates in a similar way. No borrower deposit is required for this Halifax mortgage. Instead, a family member puts 10% of the property purchase price into a 3 year fixed term savings account. This will be returned with interest after the 3 year period is up, as long as mortgage payments are up to date. Find out more about these by speaking to a fee-free mortgage broker.

Looking for a mortgage with no deposit? Want to compare it with other mortgage options and see what you can afford? Then use fee-free mortgage brokers L&C. You can start the process online and speak to a broker at any stage – all for free. Let them search the market and find the best deal for you.

2. Using property as security

With these guarantor mortgages, a legal charge is placed against the guarantor’s property. For example, a lender may ask to secure 20% of the amount you want to borrow against your guarantor’s property. The guarantor would usually need to have a substantial amount of equity in their home or own it outright. This charge usually remains on the guarantor’s property until a specified percentage of the new mortgage has been paid off.

The risks are potentially huge: if the borrower defaults and the lender repossess the property and sells it for less than the outstanding mortgage balance, the guarantor could face having their own home repossessed.

Make sure to take independent financial advice before going ahead with this. And read more in our guide Guarantor mortgages explained.

Pros and cons of taking out a mortgage with no deposit

The advantages of taking out a mortgage with no deposit include:

• You won’t need to save a deposit
• You may be able to buy sooner – and hopefully benefit from rising house prices (although this isn’t guaranteed)
• Mortgage repayments might be cheaper than renting
• By making your mortgage repayments you can build up equity in your home and hopefully be able to remortgage to a better deal once your current mortgage deal ends.

Disadvantages of buying a house without a deposit

However, there are disadvantages of getting a mortgage with no deposit to consider carefully:

• 100% mortgage rates can be higher: If you’re taking out a mortgage with no deposit, rates are generally higher than the best 95% mortgage rates available. Read more in our guide on the Best first time buyer mortgage rates this month.
• Higher monthly repayments: If you get a mortgage with no deposit your monthly repayments will be higher because not only are you likely to pay a higher mortgage rate, but you’ll also be taking out a bigger loan to buy a house. For example, if you’re buying a £300,000 house with a mortgage with no deposit you’ll be borrowing £300,000. But if you’d put down a 10% deposit you would borrow £270,000.
• Strict criteria: If you want to take out Skipton’s no deposit mortgage, you’ll need to meet criteria such as proof of having paid at least 12 months’ rent in a row, during the last 18 months
• Can you find a guarantor? If you’re hoping to take out a guarantor mortgage, you’ll need to have a family member who is willing to be your guarantor. They’ll need to consider the risks carefully and should take independent financial advice.
• Risk of negative equity: If the value of your property falls to less than your outstanding mortgage balance, you’re in negative equity. The smaller the deposit you put down, the greater the risk of negative equity. Read our guide What can I do about negative equity?

How do I get a mortgage with no deposit?

Each 0% deposit mortgage has different criteria, so the best place to start is to speak to a fee-free mortgage broker as they’ll explain your options of getting a mortgage with no deposit based on your circumstances. But generally speaking you’re more likely to get approved for a mortgage with no deposit if you have a good credit score, regular income and low level of debt.  

Can I get a no deposit mortgage as a first time buyer?

Yes, it’s possible to get a mortgage with no deposit if you’re a first time buyer. But your options will depend on your circumstances so it’s advisable to speak to a fee-free mortgage broker.

How much can I borrow on a mortgage with no deposit?

Most lenders will offer a maximum of 4.5 times a first time buyer’s annual income. So if you have an annual salary of £40,000, it’s likely that you’ll be able to borrow up to a maximum of £180,000.

To find out more read out guide on How much can I borrow for a mortgage?

Alternatives to taking out a mortgage with no deposit

There are a number of alternatives to taking out a mortgage with no deposit you may consider including:

• Save a bigger deposit: We know it’s easier said than done, but if you can take longer to save up a 5% deposit you’ll have a much wider range of mortgage options, which will reduce your monthly mortgage repayments and reduce the risks around negative equity. Read our guide on 5% deposit mortgages and make sure to investigate whether you want to take advantage of the government Lifetime ISA to boost your deposit.
• Rent to Buy: This scheme allows you to rent a home at a minimum of 20% below the market rent for at least 5 years, so that you can save for a deposit to put towards your first home. Find our more in our guide on Rent to Buy.
• Right to Buy: If you’re a council tenant in England the Right to Buy scheme could help you buy the home you rent with a discount. Read more about whether you’re eligible in our guide on Right to Buy.
• Shared ownership: With the shared ownership scheme, you buy a share of a property and pay rent on the remaining share. This means you need a smaller mortgage and therefore an smaller deposit. But there are pros and cons to this complicated scheme, so we’d always recommend buying on the open market if you can. Find out more in our guide on Shared Ownership.
• Taking out a joint mortgage: A parent can help a child by taking out a joint mortgage with them; with the joint incomes they may be able to take out a bigger loan. But there are drawbacks, for example you may need to pay the additional stamp duty rate. Plus, if it is your second home and you are still on the mortgage when the property is sold, there may be capital gains tax (CGT) liabilities.
• Alternatively, you may consider taking out a joint borrower, sole proprietor mortgage, with these mortgages the parent and child will both be named on the mortgage. However, only the child will be named on the property’s deeds. This means the stamp duty surcharge can be avoided. But before taking out one of these mortgages with your child make sure you get independent financial advice to make sure you’re making the best decision for you.

Low deposit mortgage schemes

There other schemes you can use to buy a home with a small deposit including:

Deposit Unlock: This allows you to buy a new build home from a participating house builder with just a 5% deposit using a mortgage offered by a participating lender. But you will have limited mortgage options. See our guide Deposit Unlock for more details on how this works.

Can you buy a house with no deposit and bad credit?

Having bad credit can make it harder to buy a house if you need to take out a mortgage because the lender will check your credit report when deciding whether or not to lend. But this doesn’t mean it’s not possible. The best thing to do is to speak to a fee-free mortgage broker. They’ll go through your financial situation and explain your options.

Frequently Asked Questions