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No Deposit Mortgage (Part 1)

Lewis Shaw talks to us about no deposit mortgages. Episode one of two, recorded in May 2025.

Can you buy a house with no deposit? What is a no deposit mortgage?

The good news is that, yes, you can buy a house with no deposit. In fact, you’ve been able to buy a house with no deposit for quite some time, although these products haven’t been widely advertised.

Of course there are caveats around specific lending policy and criteria, but it is possible for people to buy a home without a deposit.

Essentially, you can borrow 100% of the value of the property. You borrow the entire amount to buy the home, move in and live there. It can alleviate many years of saving to buy a home. The statistics tell us that one of the biggest barriers to people buying a home is saving up that deposit – in some cases it can be multiple thousands of pounds.

So if you can borrow the entire value of the property it can be easier to get your first foothold on the property ladder.

How does a no deposit mortgage work? What types of mortgages are available with no deposit?

It works in the same way as a normal mortgage. You approach the lender to borrow 100% Loan to Value. You need to pass the lender’s credit checks, affordability checks and everything else. You then engage in the legal process and get a survey. Once the mortgage has gone through, you can move in.

There are actually a few types of zero deposit mortgage. It’s been possible to buy a home without a deposit for a number of years, but the products have not been marketed particularly well, and many people perhaps weren’t aware.

The first option is a ‘springboard’ or ‘helping hand’ mortgage. A couple of lenders offer these, where a family member puts an amount of money into a savings account with that particular lender. There’s no deposit going into the property, but that sum in the savings account gives the lender an element of security. They then advance you the entirety of that mortgage.

Alternatively, some building societies offer ‘family assist’ mortgages. Perhaps your parents own a home that’s mortgage-free or has a very low Loan to Value because they’ve lived there a long time. The lender offers you a 100% mortgage in exchange for an additional charge against your parents’ home – that’s jargon, meaning they use their home as security .

In the event that you defaulted on the mortgage, there are essentially two houses with a charge on, which can help the lender recover their costs.

There are also two lenders now offering straightforward 100% Loan to Value mortgages. They don’t look for a track record of rent, or ask a family member to put money in a savings account, or put a charge over anyone else’s home. They’re happy to lend you 100% of the value of that property as long as you pass credit checks and everything else.

So there are multiple schemes to get on the property ladder without a deposit. Deciding which one is right is determined by your circumstances.

Which banks or lenders offer no deposit mortgages in the UK?

There are a couple of high street banks that offer no deposit mortgages – these are where you would be asked to contribute to a savings account.

We’ve also got Skipton Building Society offering a ‘track record’ mortgage, where you need to have been paying rent for at least a year plus all the household costs. If the mortgage payment is lower than that total, you could get a 100% mortgage.

We’ve also got two new lenders that have come into this space in the last month, Gable Mortgages and April Mortgages. These offer a full 100% no deposit mortgage. Hopefully this will allow lots of people to buy their first home without having to wait years to save up that deposit [information correct at the time of recording in May 2025].

Can First Time Buyers get a no deposit mortgage? Who is eligible for one of these?

These mortgages are squarely aimed at First Time Buyers who are struggling to save the deposit. But in some cases, it doesn’t matter if you’re not a First Time Buyer. Obviously, there’s limited choice, but even if you’ve owned a property before, there may still be options.

In terms of eligibility, you’re going to need a really great credit profile. You can’t have had late payments, missed payments, CCJs or defaults at any time in the last few years. You would also need to be able to demonstrate a stable employment record – whether that’s employment or self-employment – to be eligible for these mortgage products.

Is a no deposit mortgage the same as a 100% mortgage?

In a way, they are slightly different. As I mentioned previously, some lenders ask to take a charge over a parent’s house, or for them to put some savings into an account. In that respect, you’re still putting something up as security.

You would still be borrowing 100% of the property’s value, but someone else still needs to get involved. Whereas with April Mortgages and Gable Mortgages it’s pure 100% lending, where they don’t require any collateral.

Effectively, though, all of them allow you to borrow 100% of the house price and get onto the property ladder without having to save up for that deposit.

Do I need a guarantor for a no deposit mortgage?

No, you don’t, although there are schemes where you can use a guarantor if you need to in terms of increasing your borrowing capacity. You might use a parent’s wage to borrow slightly more, if that’s necessary.

But a guarantor isn’t essential. The newer options we’ve discussed are specifically designed for people that don’t have someone to go on the mortgage with them. It means they can get on and buy that home, to escape paying thousands of pounds in rent each year.

What credit score do I need for a no deposit mortgage? Can I get a mortgage with no deposit if I have bad credit?

The reality is that if you’re borrowing 100% of the value of a property and not putting a deposit in, your credit will need to be excellent. Unfortunately, if you have bad credit, this is not going to be a product for you.

100% lending is as risky as it gets for a mortgage lender. There’s no equity in the property at the start, so they’re relying upon certain things to keep everyone safe. Number one is that you pay all your mortgage payments on time – and the only way of them assessing that is through your credit history. Number two is for property prices to stay stable – because if they fall, everyone can get into a big pickle very quickly.

Realistically, then, your credit needs to be as good as it can be. Putting numbers on this is incredibly difficult, because there are three separate credit reference agencies: Experian, Equifax and TransUnion. Each one measures things slightly differently.

But if your credit score is in the ‘excellent’ range when you log on to any app or agency, you’re in the right ballpark. If it’s less than excellent, you may get declined.

Do I need a family member to support my application?

No, but it depends what the scheme is. If it’s one where they’re putting money into an account, yes, you will need family support – and the same where a lender takes a charge over someone else’s home.

But you don’t need a family member for the Skipton track record mortgage, that’s based on your rent you’ve been paying, or April Mortgages and Gable Mortgages’ 100% lending.

You don’t need a family member to support the application, although perhaps one could help you borrow more. The point of these new products is to support people that don’t have family support to buy a home.

Are there income requirements or limits for a no deposit mortgage?

Yes, there are. So there is typically a minimum income, but if you’re working full time and earn more than minimum wage, you should surpass that.

The minimum income with one lender is £24,000 as a household. It doesn’t necessarily have to come from one person. It does vary lender to lender. With the particular no deposit scheme you’re considering, it comes down to the lender’s specific lending policy and criteria. It also depends on your circumstances, but there are multiple options out there.

Are no deposit mortgages backed by government schemes?

The point of no deposit mortgages is to alleviate the need for government schemes. The lenders offering full 100% deals without frills and bells and whistles aren’t backed by the government.

You just need the income, a great credit score and to pass all their checks – then you can buy a home.

Is there anything else to highlight before we return with part two?

The only thing I would add is that I’m pleased to see these types of products return. Saving up a deposit is one of the biggest barriers to home ownership, particularly if people don’t have family support.

If these deals enable people to take the first steps onto the property ladder, I think it’s a good thing. Although there are risks to consider, it’s very positive.

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No Deposit Mortgage (Part 2)

We continue the conversation on no deposit mortgages with Lewis Shaw.

Are interest rates higher on no deposit mortgages?

Yes, interest rates are higher on no deposit mortgages or 100% Loan to Value mortgages. That’s simply because lenders are taking essentially a bigger risk – and with higher risk comes greater reward for the lender.

You will pay more in interest on no deposit mortgages in comparison to mortgages where you put in a 5%, 10% or 15% deposit. However, these deals are designed to help people take their first step onto the property ladder. So whilst the interest rates are higher, you could argue that it’s still better than paying thousands of pounds in rent each year.

How much can I borrow with a no deposit mortgage?

How much you can borrow is based on your income, your outgoings and your household makeup. It might range from a single person with no debt and no dependents to a married couple with two children, cars on finance, personal loans and credit cards.

The maximum mortgage amount will depend on the specific lender and their policy. For example, there are two full-fat 100% Loan-to-Value mortgages available from April Mortgages and Gable Mortgages.

One of those lenders allows you to borrow up to £600,000, and the other allows up to £1,000,000 if your income supports it. Interestingly, they have lower limits as well. One sets a minimum property price of £125,000, and the other is £75,000.

Do I need to pay extra fees when it comes to a no deposit mortgage?

There are fees to pay, yes. Just because you don’t need a deposit, you will still need some money to actually buy a home – because there are still survey costs and legal fees to pay. Lenders have booking fees as well.

Fees vary depending upon the lender, your circumstances and – in some cases – the purchase price of the property.

Are repayments higher on a no deposit mortgage?

Yes, repayments are higher on a no deposit mortgage than when buying a home with a deposit. This is firstly because, of course, you’re borrowing more than you would if you had a deposit.

Secondly, the interest rates on no deposit mortgages are higher, so your monthly repayments will be more. But if that saves you paying thousands of pounds in rent, it could make financial sense – depending on the property prices where you are.

Can I go into negative equity with a no deposit mortgage?

Yes. One of the big risks with a no deposit mortgage is negative equity, where the value of the mortgage is larger than the value of the property.

Let’s say you bought a home with a 100% Loan to Value mortgage for £100,000. Then, six months after you’ve bought it, house prices fall and your home is then only worth £95,000. Your mortgage is still likely going to be very close to that £100,000 mark – that is what’s called negative equity.

That’s not a huge problem as long as you don’t need to sell the property. But because there isn’t a deposit buffer, the risk of negative equity is much higher. It can sometimes trap people where they need to sell the property, it has decreased in value, but they’ve not paid that amount off their mortgage.

Negative equity is a risk with any property, even if you had a 5% deposit or 10% deposit. If property prices fell by 20%, for example, lots of people would be in negative equity.

You do need to think about this carefully as it is a risk, but if you’re buying a property and intend to stay there for the next 5, 10, 15 years, etc., it’s not as serious as people may perceive.

What are the risks of borrowing 100% of the property value?

Other than negative equity, the other big risk comes if you’re buying with a partner. If you later decide to go your separate ways and split up, you could face a problem.

You don’t have any deposit in the property, and with higher interest rates your mortgage balance isn’t coming down as quickly. Again, you may face the prospect of negative equity.

More importantly, depending on the type of 100% mortgage you apply for, there may be redemption penalties. These apply if you’re trying to exit early, a bit like a phone contract.

Let’s say you had a 100% mortgage on a five-year fixed rate. In year one of that mortgage, you split up with your partner and decide to sell the property. You may have a penalty to get out of that mortgage. If that’s the case, you’re going to have to find a chunk of money just to sell it.

If property prices have fallen at the same time, it may prevent you from selling the property. Unless you’ve got the cash to repay that loan plus that penalty, you could be trapped.

It’s important that if you’re buying with a partner, you’ve had a serious conversation about this and you both feel the relationship is stable enough. If it helps you to buy your first home, that’s a positive. But realistically, nothing is risk free.

A no deposit mortgage is not for everyone. If you’re able to save for the deposit, perhaps that’s a better alternative.

What are the alternatives to a no deposit mortgage? Is it better to save for a deposit instead?

The only alternative is simply saving for a deposit. Over the past few years, many things have been thrown at the UK – a pandemic, a war in Europe, rapid inflation and an oil crisis. We left the European Union, we’ve had changes in government and we’ve had mortgage rates jumping up very quickly.

However, the housing market throughout that period has remained remarkably resilient. So is it better to save for a deposit or buy straight away? If it’s going to take you multiple years to save up a deposit, house prices may increase during that time and that saving target will keep moving further away.

You may be paying rent, rather than paying down a mortgage. So it really depends upon how quickly you can save a deposit. If you can save a deposit in a short period of time, generally we’d recommend that.

But if that’s not feasible, a no deposit mortgage is an option. Or, perhaps a family member could gift you a deposit, which most lenders allow. It all depends upon your circumstances.

Can I switch to a different mortgage later on?

Yes, and the specific type of no deposit mortgage will determine how soon you could do that.
It will depend on the length of the fixed rate, whether you have been able to overpay on your mortgage, and whether you can move to a different lender for a remortgage.

You can switch lenders, but there may be a penalty to do that if it’s before the end of your current deal. This will be specific to the mortgage lender and the product we apply for. Those terms and conditions would be explained clearly at the point of application, so you can make an informed decision about the right option.

How can a mortgage broker help here? What else do we need to know about no deposit mortgages?

Mortgage brokers are here to give you advice and we work on your behalf, not the lender’s.
We help you make an informed decision and offer advice on buying a home, whether you have a deposit or not.

The vast majority of no deposit mortgages, and particularly those with no charge over another home, are only available via mortgage brokers and mortgage advisors.

So if that’s something you’re considering, you will need to speak to an advisor. The lenders want people to have impartial, independent advice to understand what they’re doing and what they’re getting into.

We will go through all the risks, benefits, and everything else in a free and frank chat about whether this is the right thing for you to do.