No Deposit Mortgages

If you’re unable to access a significant amount of cash for a mortgage deposit, you might be concerned you have no options. But, that’s not the case. It is still possible to get a mortgage and buy a property.

This guide explains the process of getting a mortgage with no deposit. It will also cover the government support available and how to find the lenders willing to set up a loan with this type of arrangement.

Click on a link below to jump straight to a section or keep reading for all the information you need…

Can you still get a no deposit mortgage?

Yes! They are available, however there are some key points to bear in mind. It’s very rare to get a 100% loan-to-value (LTV) mortgage where you borrow the total sum of the property price.

There is currently one UK lender offering deposit-free mortgages, and other options to fall back on if you don’t qualify for this product or wish to explore alternatives.

How to get a mortgage deposit with no cash funds

Most lenders require at least a 5% deposit. But if you’re unable to get together this amount there’s still plenty of options and routes you can take.

Here are some avenues that might be worth exploring:

100% LTV mortgages

Only one UK lender offers these at the time of writing (May 2023). To qualify for this deal, you will need to be a first-time buyer with a track record of making rental payments on time for at least 12 months and have clean credit.

The interest rate at launch is 5.49% and maximum borrowing is capped at 4.49 times salary. It cannot be used to purchase a property worth more than £600,000 and the longest term available is 30 years.

Guarantor mortgages

Using a guarantor means that a willing family member or close friend can actually help you get your mortgage. Sometimes this is also known as a ‘family assist mortgage’. It’s probably the most realistic way of securing a mortgage with no deposit.

Instead of a deposit, they can secure your mortgage against savings or a property they own. Sometimes there are limits to how much of their equity they can use.

Lenders might also ask that the savings equal to the cost of a deposit are placed in an account held by them.

This acts as a ‘temporary deposit’.

Family offset mortgage

These work in a very similar way to a guarantor mortgage except that if money is put into a savings account, no interest is earned as this is ‘offset’ against the mortgage interest.

Family link mortgage

Using this option would mean that a family member can take out a second mortgage on their home equal to 10% of your property’s value, and you take out a mortgage for the remaining 90% on the property you wish to buy.

Then, you repay their 10% equity over 5 years and pay the rest of the 90% over your chosen term.

Gifted deposits

This is when someone gifts you the amount you need for a deposit. These gifts can work in a variety of different ways and can come from a number of sources.

Along with family and friends contributing money, there’s also vendor, developer, and landlord gifted deposits to explore.

Using equity

You may own another house or perhaps partially own a family property or holiday home. It can be possible to use the equity you own elsewhere to be used in lieu of a cash deposit.

Assets

Similarly, if you own significant assets (that might be illiquid so they cannot be easily converted into cash), some lenders will allow you to create an asset-backed mortgage arrangement.

This is where your assets can be used as collateral and remove the need for a deposit.

Borrowing for your deposit

There are a number of ways you might be able to borrow to cover your deposit. If you have no access to cash savings, there are other ways to access funds.

Taking out a loan to go towards a bigger loan (your mortgage) is not ideal. However, a handful of lenders would be willing to consider this under the right circumstances.

There are also some lenders who will let you use a credit card to top-up your deposit amount.

In both cases it’s important to remember that lenders will assess your debt when calculating your affordability. This could prevent acceptance or lead to worse rates.

So, it’s vital you speak to the lenders willing to be flexible, otherwise you could face immediate rejections and marks on your credit file.

New build developer loans

Sometimes property developers can give you the option to borrow from them to pay for your deposit on a home they’ve built.

You’d then pay back the agreed amount over a set period of time. But, it’s important to remember you’d be paying this back alongside your mortgage payments.

How a broker can help

Getting a mortgage with no deposit is tough these days, but there are methods you can use to buy a house with little to no upfront money.

Using a skilled advisor who has experience securing mortgages for clients without funds for a deposit is going to be extremely important.

In addition to identifying the right lenders who can deal with these situations, they can also help educate you on any government schemes you may be eligible for and walk you through the whole process.

Just make an enquiry and we’ll put you in touch with a mortgage broker we work with who specialises in securing mortgages where no deposit is necessary.

Government schemes available

These programmes are designed to help people with little (or no) deposits get onto the property ladder.

Here’s a breakdown explaining some of the main options:

 

What to do if you can’t get a 100% mortgage

If you’re unable to entirely remove the need for a deposit, there are still ways that you can drastically reduce how much you need, or get some bonus cash to boost your application:

Examples of zero deposit lenders and rates

Here are a few examples of current deals (accurate at the time of writing) from lenders willing to offer a 100% LTV family assist mortgage:

• Skipton Building Society – 5.49% for its 100% LTV ‘Track Record’ mortgage. This is aimed at renters with clean credit and 12 months’ history of making their rental payments on time.
• Barclays – 5.89% APRC for a ‘Family Springboard’ mortgage with a five-year fix and a maximum loan amount of £500,000.
• Mansfield Building Society – 5.49% for a ‘Family Assist’ mortgage on a three-year discounted variable rate.

Please note that the rates and lender details cited above were accurate at the time of writing (May 2023) and are subject to change.

Work out your mortgage repayments

Use our calculator below to see what your repayments could be, across different term lengths and interest rates.

Eligibility criteria and getting the best rates

Depending on which path you end up exploring with your broker, here are some factors that will impact the process and your ability to get the best rates:

• Deposit loans: if you’re using a loan to pay for your deposit, the small number of lenders who are open to this will likely require a higher amount. So, you could need somewhere in the region of 25%.
• Government support: for some government assistance schemes, you will need to be a first-time buyer in order to qualify. This will be out of your control to a certain extent. But a skilled broker will be able to direct you towards any help and support that you may qualify for based on your specific situation.
• Guarantor or mortgage indemnity guarantee (MIG): having either of these in place to help support your mortgage payments can reduce the risk for a lender. It covers their costs if you’re unable to keep up with payments and acts as a form of insurance.
• Income and employment: whether you’re employed or self-employed will affect a lender’s assessment of you. If you’re self-employed, you’ll need to prove between at least 1-3 years worth of records and accounts.
• Your credit score: using a lower deposit can mean more risk for lenders. So, they’ll want to take a good look at your credit history. It’s worth downloading all your credit reports and getting your broker to evaluate them before approaching lenders. This way you can take care of any issues in advance and avoid unnecessary mistakes or possible rejections.

Speak with a no deposit mortgage broker

To get a mortgage with minimal or no deposit, your best chance of success is by using a specialist broker. Ideally one who has experience setting up mortgages with low amounts of upfront cash.

We offer a free, broker-matching service.

This means we don’t charge anything to quickly assess your needs and then pair you up with a local mortgage expert. They will have the knowledge and contacts to introduce you to the most suitable lenders offering the best rates for your circumstances.

Just call 0808 189 0463 or make an enquiry. We’ll set up a no obligation chat between you and your ideal mortgage broker today. This initial chat won’t cost you a penny, so you’ve got nothing to lose!