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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. For some buyers, it can make buying a house with no deposit possible. But it’s crucial that you understand how they work, what the pitfalls are and what other options are available.
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.
Other types of mortgages that don’t require the buyer to put down a deposit include guarantor mortgages, where a loved one puts up their property or savings as security against the loan, and Right to Buy mortgages, if the lender lets you use your Right to Buy discount as your deposit.
For buyers who are hoping to buy a property without saving a deposit first, these mortgages are the main ways of buying a house with no deposit in the UK.
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.
However, if you have a 10% deposit or more, you can usually access a greater range of mortgage deals and lower mortgage rates, making your monthly payments more affordable.
But many buyers find that raising a deposit of this size takes a long time. Nationwide’s latest Affordability Report found a first time buyer would need to put aside around £320 per month for almost six years to cover a 10% deposit (£23,000) on a typical UK property.
But with a no deposit mortgage you don’t need to put down any deposit.
There are a number of ways to get a mortgage with no deposit including:
Skipton Building Society’s 100% LTV Track Record Mortgage is designed to help renters buy a property without needing a deposit if they have a proven track record of paying rent.
The Skipton 100% mortgage is available 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:
The lender has also launched a 100% Shared Ownership Track Record mortgage.
Mortgage lender April has launched a 100% mortgage which requires borrowers to fix their interest rate for 10 or 15 years.
For more information on 100% mortgages, read our guide 100% Mortgages – should I get one?
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Guarantor mortgages can sometimes make buying a house with no deposit possible. Guarantor mortgages may come with slightly different names and have different eligibility criteria, but there are two main types:
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 sells it and if they get less than is owed on the mortgage, they may take the difference from the guarantor’s savings.
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.
KEY INFORMATION
The advantages of taking out a mortgage with no deposit include:
However, there are disadvantages of getting a mortgage with no deposit to consider carefully:
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.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
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.
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 our guide on How much can I borrow for a mortgage?
There are other ways of buying a house with no deposit or with a very small deposit.
You don’t have to make life’s big financial decisions alone. Get the right IFA for you today with our partners at Unbiased.
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.
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.
In 2024, the average deposit put down on a first home was £61,090 – around 20% of the property price, according to figures from Halifax.
Yes you can get a mortgage with no deposit. The lender may offer you up to 100% LTV or you may need to take out a guarantor mortgage to be able to get a 0% deposit mortgage.
The type of home you can buy with a 100% mortgage will depend on the lender’s lending criteria. For example, lender April specifies that you cannot take out its 0% deposit mortgage if you’re buying a flat.
Before the 2008 financial crash, 100% mortgages were widely available. In fact, some lenders offered mortgages of up to 125% of the property’s value. However, after the financial crash most of these mortgages were pulled from the market as lenders considered them too risky.
No, there isn’t a zero deposit mortgage government scheme. However, the government-backed Mortgage Guarantee Scheme encourages lenders to offer 95% mortgages. And 5% deposit mortgages are available in the market generally.
Yes, although options are limited. Most buyers need at least a 5% deposit. However, some lenders offer 0% deposit mortgages, and other routes such as guarantor mortgages or family-assisted mortgages can also help people buy a house without saving a deposit first.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
Independent Financial Adviser service is provided by Unbiased, who match you to a fully regulated, independent financial adviser, with no charge to you for the referral.
Bridging Loan and specialist lending service provided by Chartwell Funding Limited, registered office 5 Badminton Court, Station Road, Yate, Bristol, BS37 5HZ, authorised and regulated by the Financial Conduct Authority (FRN: 458223). Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.
