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100% mortgages & 0% deposit mortgages

Find out about how 100% LTV (loan-to-value) borrowing works, and who can get a no deposit mortgages in our helpful guide

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What is a 100% mortgage?

A 100% mortgage is where you borrow the full amount needed to buy a property - or 100% loan to value (LTV) - rather than using a deposit. For this reason they are also sometimes also referred to as a no-deposit mortgage.

Typically the higher the LTV ratio, the greater the risk for the lender, so 100% mortgages tend to have higher interest rates than if you use a deposit when buying your home.

How does a 100% mortgage work?

The only difference between a 100% LTV mortgage and any other mortgage is the fact that you don't need a deposit. With a zero deposit mortgage, you're still borrowing a sum of money to purchase a property and then repaying it, with interest, over a set term.

It's important to consider that it's easier to fall into negative equity when you don't provide a mortgage deposit. This is because you don't hold any equity in your property at the outset, so if it falls in value, you'll end up owing more than it's worth.

Are they available?

There are very few lenders offering 100% mortgage options, but most of those available are via a specific kind of product, such as a guarantor mortgage or family assisted mortgage.

This is because following the 2008 financial crash they were generally deemed to be too risky. Tighter restrictions on lending were introduced by the FCA (Financial Conduct Authority) and lenders withdrew their 100% products.

However, buying a home has become out of reach for many prospective first-time buyers as average house prices significantly outweigh average income, and interest rates are higher than they were in the past decade. This led to Skipton building society bringing out the first truly 100% mortgage in over a decade in 2023.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Advantages of 0% deposit mortgages

  • They allow borrowers to purchase a home without a deposit, which could mean getting onto the property ladder sooner

  • If using a guarantor or family assisted mortgage, they can be a great way for parents and grandparents to help their family buy a home

Disadvantages of 0% deposit mortgages

  • The interest rates are higher

  • You have no equity (share) in the property at the start of the mortgage, which puts you at a greater risk of negative equity if property prices fall – this may prevent you from moving or remortgaging until property prices rise again

  • If using a family member as guarantor, their finances are at risk if you're ever unable to repay the loan

How much can I borrow at 100% LTV?

If you're borrowing the entire cost of your new home, this may limit the value of property you're able to buy. Lenders typically offer around 4.5% your income, so:

If you earn £30,000, you may be able to borrow around £135,000 - so this is the value of the home you could afford to buy

If you added a 10% deposit - it's unlikely to change the amount you could borrow, as that's based on affordability - but you could buy a property worth £148,500 with the £13,500 deposit + £135,000 loan, increasing your options considerably

A mortgage calculator can help you to get an idea or the sort of mortgage size you might be able to get based on your income and deposit. Use our ultimate mortgage calculator to see what you might be able to borrow:

Skipton 100% mortgage

In June 2023 Skipton building society introduced a 100% mortgage aimed at those trapped in 'generation rent'. The Skipton deposit-free 'Track Record' mortgage is aimed at those renting property but unable to qualify for a mortgage to buy a home of a similar value to the one they're renting.

Although initially aimed at first-time buyers, Skipton have since broadened their criteria to include those who have been unable to get back onto the property ladder due to divorce, ill health, etc.

Key facts about the Skipton deposit free mortgage

  • You'll need to provide at least 12 months proof of paying rent on time - and you won't be able to get a mortgage with repayments larger than the monthly rent you've paid during that time

  • You don't need to be a first-time buyer, but can't have owned a property anywhere in the world for at least three years

  • You can only borrow up to £600,000 and the property can't be a new build flat, or based in Northern Ireland

  • Although a no deposit mortgage, you can provide up to 5% if you wish - this could provide you a small barrier from negative equity

Are 100% mortgages a good idea?

A mortgage is a huge commitment, and even more so if you're borrowing 100% of the cost of your home. It's therefore strongly recommended that you speak to a mortgage broker if you're unsure which type of mortgage is right for you.

100% mortgages give those without the ability to save a deposit another path into home ownership, so if you're able to qualify, are an attractive option for many. It's important that you understand the greater risk involved in borrowing at 100% LTV, rather than a lower level of borrowing, however, before you commit to one.

What alternatives are there to deposit free mortgages?

Although it's appealing to use a deposit free mortgage option to get onto the property ladder sooner, there are other options that could help you to do so with slightly less risk.

An experienced mortgage broker will be able to advise you on which mortgage option is best for your circumstances.

Gifted deposits

If you're struggling to save a large enough deposit and are lucky enough to have family members willing to help, you might be able to supplement your deposit with a gifted deposit.

Not all lenders accept gifted deposits, and some limit the amount the can be gifted. Offering even a small deposit reduces the risk to both you and the lender, and is therefore likely to give you access to more competitive mortgage rates.

Home ownership schemes

There are a number of home ownership schemes in the UK, offered by both the government and property development companies. Each is intended to help those struggling to save a deposit or meet the affordability criteria of taking out a mortgage to buy a new home.

These include:

100% LTV mortgage FAQs

Can I get a loan for my mortgage deposit?

It may be possible to get a loan for a house deposit but many lenders won't accept this. It's usually better to save up a deposit, use a gifted deposit from a family member, or opt for a guarantor or family mortgage.

In some cases, new-build developers may offer loans to help you with a deposit to purchase a property from one of their developments. However, it's important to check the terms and conditions of the loan, and make sure that you can afford to pay this back in addition to your mortgage repayments.

Are there any alternatives to 100% mortgages?

There are a number of home ownership schemes available across the UK that are intended to help people get a foot on the property ladder. Typically this is by either reducing the size of the deposit requirement, lending the deposit money, or providing access to specific properties that can be bought with less financial outlay.

That said, none of the schemes currently available allow borrowers to take out a mortgage without any form of deposit, so they are not direct alternatives.

Can you get a mortgage with no deposit?

It's possible to get a mortgage without a deposit, but you'd either need to qualify with the one lender in the UK currently offering a deposit free mortgage, or have some form of family or guarantor assistance.

Be sure to consider the risk of negative equity, as it may be worth waiting to save a deposit, vs losing money on your property.

Is there a no deposit mortgage government scheme?

No, there are no government schemes that allow you to get a mortgage without using a deposit at all. However, there are some that will help you provide a larger deposit. Check out our assisted mortgage schemes page for more information.

Can you get a buy-to-let mortgage with no deposit?

No, you won't usually be able to get a zero deposit mortgage to use for buy-to-let purchase. Some specialist finance companies may offer this option to portfolio landlords, but they'll usually need to put down another investment property as security, in lieu of a deposit.

Typically buy-to-let mortgage lenders require a minimum of a 25% deposit (although this can vary from 20-40% depending on the lender and the borrower's circumstances).

Recent buy-to-let statistics found that there were 83,000 buy-to-let mortgages were approved in 2023, and that number is only expected to rise.

YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

The FCA does not regulate mortgages on commercial or investment buy-to-let properties.

Uswitch makes introductions to Mojo Mortgages to provide mortgage solutions. Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website. Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH. Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215) Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.

Last edited by Kellie Steed on 11 January 2024