No deposit mortgages
No deposit? No problem. Step onto the property ladder without treading on your savings.
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What is a no deposit mortgage?
Trying to buy your first home but struggling to save for a deposit? You're not alone. With rent, bills, and everything in between, saving thousands for an upfront lump-sum can feel impossible. That's where no deposit mortgages come in – a way to get on the property ladder without putting down a chunk of cash.
A no deposit mortgage (also known as a 100% mortgage) is exactly what it sounds like: a home loan that doesn't require you to put down a deposit. Normally, when you buy a home, you'd need to pay at least 5%–10% of the property's value upfront. But with a no deposit mortgage, you borrow the full property value.
How does a no deposit mortgage work?
These types of mortgages are usually aimed at first-time buyers who have a solid income but haven't been able to save a deposit. The catch? Mortgage lenders still typically want some kind of security – usually in the form of a guarantor or family support.
Let's say the property purchase price is £200,000. A standard mortgage might require a deposit of £20,000 (10%). With a no deposit mortgage, you'd borrow the full £200,000, while your parents or a close family member might need to:
- Put money into a lender-linked savings account as a guarantee
- Use their own home as security in case you don't keep up with payments
Who's eligible for a no deposit mortgage?
No deposit mortgages aren't open to everyone. Lenders will want to see that you're financially responsible and can handle the monthly repayments.
Here's what they usually look for:
- A steady job and regular income
- A good credit history
- A family member willing and able to support your application (either with savings or property)
- A lower loan-to-income ratio (not borrowing far more than you earn)
For example:
Say you're earning £35,000 a year and looking to buy a house under £150,000. If your monthly outgoings are reasonable, a lender might be more comfortable offering you a no deposit mortgage – especially if your parents can back you up.
On the other hand, if you're looking to borrow £250,000 on a £25,000 income, you might struggle to find a willing lender.
A dream grounded in reality
A mortgage deposit of zero can sound like a dream come true for many first-time buyers - but it's important to look at the whole picture.
Advantages:
- Get on the property ladder sooner – no need to save up for years
- Keep your savings – for furniture, emergencies, or just peace of mind
- Switch to ownership – swap renting for owning without major upfront costs
- Beat rising house prices – the longer you wait, the more expensive homes can become
Disadvantages:
- Higher interest rates – lenders charge more because they're taking on more risk
- Higher monthly payments – since you're borrowing more, your mortgage payments may be higher
- Negative equity risk – if property prices fall, you could lose money on your home and owe more than it's worth
- Risk to guarantor - if the borrower defaults on their payments, the guarantor's home or savings could be on the line
Negative equity explained
If you borrow 100% of a £180,000 property and the market drops by 5%, your home might now be worth £171,000 – but you still owe the full £180,000 (or close to it). That's called negative equity, and it can make it hard to move or remortgage.
Summing up
No deposit mortgages can be a great way to buy a home sooner rather than later, especially if you have family willing to help out. But they're not for everyone, and they come with extra risks and costs. If you're serious about buying without a deposit, it's worth doing your homework and comparing the full range of deals.
The key takeaway? It's not just about whether you can get a mortgage with no deposit – it's about whether it's the right move for you.
Frequently Asked Questions
Do I still need money upfront for anything?
Yes, even without a borrower deposit, you'll still need funds for costs like solicitor's fees, surveys, and moving expenses. These costs can quickly add up, so it's important to plan ahead to avoid surprises. It's also important to remember household bills, moving costs, and spending money as you settle into your new home.
What happens if my guarantor changes their mind?
If your guarantor wants to be released from the deal early, it typically depends on how much equity you've built in the home. Lenders will look again at the situation, and in some cases, may only let the guarantor go if part of the loan has been repaid. It's a good idea to have a backup plan in place, like considering another guarantor or paying off the loan faster.
Do all lenders offer no deposit mortgage options?
No, you can usually only get a no deposit mortgage from a few lenders, and the eligibility criteria has been strict since the financial crisis of 2008. It's worth speaking to a mortgage broker to find lenders who specialise in these types of deals, and remember you'll likely need a guarantor or family support to qualify.
Is a no deposit mortgage a good idea for first-time buyers?
It can be, especially if you have a steady income but little savings. Depending on the value of the property, your loan to value ratio, and how much deposit you can afford, you may be able to borrow money more cheaply than paying rent. Just be sure you understand the risks and costs involved.
What are the alternatives to a guarantor mortgage?
If you'd rather risk your own money than your guarantor's savings, you might consider a smaller mortgage or one with a small deposit. The Help to Buy - Equity Loan scheme is no longer offered, but alternatives include joint mortgages or the shared ownership scheme, which is backed by the UK government. Scotland, Wales, and Northern Ireland have similar schemes.
Can I remortgage later to a better deal?
Yes, if you've built up equity in your home, either through repayments or an increase in property value, you may be able to remortgage to a better deal, maybe even without a guarantor. It's a great way to lower your mortgage repayments, but be sure to shop around for the best rates before you commit.
About the author
Lawrence Howlett
Lawrence Howlett brings a results-driven mindset to his writing, shaped by over a decade of experience across finance, legal, and energy sectors. As the founder of Moneysavingadvisors, he’s built a reputation for turning complex financial concepts into clear, actionable insights for consumers. His writing stands out for its clarity, structure, and focus on delivering value.
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