How to get a mortgage with no deposit

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Also known as a 100% LTV (loan to value) mortgage, a no deposit mortgage is an option that some people consider if they’re struggling to save up enough money for a deposit.

In our guide to first-time buyer mortgages with no deposit, we explain exactly what they are and how they work, as well as how to ensure that you’ve got a good credit score and credit rating to increase your chances of being accepted for a 0 deposit mortgage.

What is a 100% mortgage?

This type of mortgage requires no deposit at all and it’s usually aimed towards people who are unable to save up enough money for a deposit for a house.

While most lenders would require a deposit of at least 5% in order to offer a mortgage, a 100% mortgage allows you to borrow the full property value of the house without having to pay any money upfront.

Can you get a mortgage with no deposit?

While it’s not particularly very common to get a mortgage with no deposit, largely because it’s usually quite difficult to do, it is indeed possible to get a mortgage without putting a deposit down for a house.

How to get a mortgage with no deposit

As it’s so rare to be able to get a mortgage without a deposit now, it’s safe to say that you’ll have to spend a lot of time trying to obtain one as very few lenders even offer the option to get one nowadays.

The only way to get a mortgage with no deposit today is by getting a guarantor mortgage which involves asking a friend or family member who owns their own home to be named on your mortgage as well. If you fail to make your mortgage payments, the financial responsibility will fall to them, so before you enter into a guarantor mortgage agreement with someone, you need to ensure that you’re both fully aware of the pros and cons.

In order for someone to qualify as a guarantor for a 100% mortgage, they will need to own their own home and use their home as security against your mortgage which gives the lender the power to reclaim money from their home or even repossess it if you fail to repay your mortgage on too many occasions.

Alternatively, they may be able to use their savings as security in which they’d offer their savings in a lump sum to the mortgage provider who will then use them as security until you’ve paid off a certain amount of your mortgage. 

In order to be approved for a guarantor 100% mortgage, you will need to have a good credit score, very little to no debt and a consistent income.

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Can you get a no deposit mortgage without a guarantor?

It is not possible to get a no deposit mortgage without a guarantor, so if you’re unable to find a suitable guarantor to help you get a 100% mortgage, you will have to look at other options to help you get on the property ladder and buy a house.

The pros and cons of a 100% mortgage

Of course, there are several advantages and disadvantages of 100% mortgages that you should be aware of and consider before asking someone to be your guarantor to help you get a no deposit mortgage.

The advantages

  • A no deposit mortgage enables you to get on the property ladder quicker and buy your first home without needing to save for a deposit.

The disadvantages

  • You need to find someone suitable to be your guarantor for a no deposit mortgage and it can often be tricky to navigate financial matters when someone is risking such a substantial amount of money for you. It can often lead to disagreements or tension with friends or family members if they’re risking a lot of money.
  • 100% mortgages usually have much higher interest rates as there is more risk involved for the lender, so even though you might be able to get a mortgage without a deposit, you’ll still end up paying a lot more money back in interest.
  • They’re usually much harder to be accepted for as they’re not something that many banks or lenders like to offer very often, which means it can be harder for you to obtain one.

What are your options if you can't get a 100% mortgage?

Take a look below at some of the alternatives to getting a 100% mortgage to see if there is a more suitable option for you.

Help to Buy

The Help to Buy scheme is one of the most common ways to get a mortgage as it provides an equity loan where you can borrow money for a deposit interest-free for five years at a value of up to 20% of the property's value. You will then have to put down a 5% deposit from your own money and then take out a mortgage for the rest.

Shared ownership

This option allows you to buy a percentage of a property, usually between 25% and 75% and the rest is owned by a local authority or developer and then you will have to pay rent on the percentage of the property that you own.

Read more: The pros and cons of shared ownership

New builder development loans

If a property developer has just built a new home that you want to buy, they sometimes give you the option to borrow enough money from them for a deposit for the house and then they will expect to be repaid within 15 years.

Right to buy mortgage

This gives you the option to buy your house at a discounted price if you’ve lived in a council house for more than three years. The discount can sometimes be as much as 70%, depending on how long you’ve lived in the house.

Joint mortgage

If you can save up for a deposit with someone else, then you can combine your two incomes and share the financial burden and get a mortgage together.

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