Can you Get a Mortgage with No Deposit?

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Saving for a deposit for a property in this day and age is difficult, especially with the current cost of living crisis. However, some potential homeowners may be eligible for a no deposit mortgage. 

In this guide, we’ll discuss what a no deposit mortgage is, who is eligible and the pros and cons of one. 

Key Takeaways

  • No deposit mortgages cover the full cost of your property, meaning you don’t need to save for a deposit
  • They are not very common in the UK and you will need to meet specific requirements to get one
  • Skipton Building Society reintroduced 100% mortgages in 2023 to help first time buyers get on the property ladder

What is the lowest deposit you can give for a mortgage?

For a lot of major lenders, the lowest deposit you can give for a mortgage is 5%. This means saving up for at least 5% of the property’s value that you’re hoping to purchase, which will leave you with a loan-to-value ratio of 95%. 

Although 5% is the minimum, a lot of lenders will favour borrowers who have deposits of 10% and above. However, this does not mean you can’t get a mortgage if you only have a 5% deposit, and there are actually creative ways to secure a mortgage with little to no deposits. 

What is a ‘no deposit’ mortgage?

A no deposit mortgage, or 100% loan to value mortgage, is a loan for the full price of the property you’re buying. 

As we’ve mentioned, you would usually need a minimum of 5% for a deposit, but with a 100% mortgage you don’t need a deposit at all. 

How much deposit is usually needed to buy a house?

Although a 5% deposit is acceptable, many lenders prefer to receive deposits of 10% and above. The higher your deposit, the less of a risk you are in the eyes of a lender. 

When you have a higher deposit, you will have access to a wider range of cheaper mortgages with lower interest rates. 

Can you get a no deposit mortgage?

Although no deposit mortgages are rare in the UK, they are not impossible to obtain. In May 2023, Skipton Building Society launched its 100% loan to value mortgage with the aim to help first time buyers who are currently renting their first home. 
You are more than likely to be eligible for a no deposit mortgage if you have a good credit score, regular income and low levels of debt. Lenders will need to see evidence that you can afford your monthly repayments.

How does a 100% mortgage work?

A 100% mortgage works by buyers borrowing 100% of the entire purchase price of a home without paying a deposit. The 100% deposit mortgage from Skipton is a fixed rate mortgage for five years, meaning the interest you pay will stay the same for the first five years of your agreed mortgage term. 

You will still need to pay solicitor and legal fees, a home survey, any mortgage fees and stamp duty where applicable. 

Advantages of a mortgage with no deposit

The main advantage of a mortgage with no deposit is that it allows you to get on the property ladder without having to wait until you have enough for a 5-10% deposit. 

In summary, the advantages include:

  • You don’t need as much cash upfront to buy a property
  • You can get on the property ladder quicker and buy the home you want before prices fluctuate
  • You can begin to build equity up in your home, meaning once your introductory mortgage comes to an end, you could remortgage for a better deal

Risks of getting a mortgage with no deposit

There are several risks you should be aware of before you dive into getting a no deposit mortgage. These include:

  • 100% mortgages are expensive, since the best interest rates are reserved for those with high deposits
  • You run the risk of slipping into negative equity, in which your property is worth less than the amount you’ve borrowed against it
  • Your money may begin to be too stretched, and if you’re not on a fixed rate term, you will need to consider how you will manage the interest rates

Are 100% mortgages available for first-time buyers?

Yes, 100% mortgages are available for first time buyers, but they will likely need a guarantor mortgage or a family deposit mortgage. 

As we’ve mentioned, Skipton reintroduced its 100% loan to value mortgage in May 2023 specifically to help first time buyers who are currently renting their first home. 

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

No, you cannot get a buy-to-let mortgage without a deposit. The criteria for buy-to-let mortgages is much stricter than it is for residential loans, and so it is much harder to be approved if you don’t have at least a 20% deposit. 

Most lenders will want to see a 25% deposit for buy-to-let properties, with some going as low as 15%, but many landlords will release equity from existing properties to cover this. 

What can you do if you can’t get a no deposit mortgage?

As mentioned, an alternative to a no deposit mortgage is a guarantor mortgage. This usually requires a family member or friend who owns their house to be named on your mortgage too. They are required to meet any repayments you miss and either use their home or their savings as security. 

You can read more about this in our dedicated blog on guarantor mortgages. 

Alternatively, you can apply for a family deposit mortgage. Your family helps you by putting security on your mortgage, either by depositing savings or by using their own property. This again gives the lender confidence that if you default on the loan, they have a way of getting the money back.

About the author 

The Barlow Irvin Team

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