Skip to content

100% mortgages

If you’re struggling to raise a deposit to get on the property ladder, it might be possible to buy a home with a 100% mortgage. Our helpful guide tells you what you need to consider.

If you’re struggling to raise a deposit to get on the property ladder, it might be possible to buy a home with a 100% mortgage. Our helpful guide tells you what you need to consider.

Written by
Sajni Shah
Consumer expert on money and utilities
Last Updated
19 DECEMBER 2023
9 min read
Share article

What is a 100% mortgage?

A 100% mortgage is when you borrow the entire value of the home you want to buy. Most mortgages require you to put down at least a 5% deposit. But a 100% mortgage means you don’t need to pay any money upfront to get a home. 

100% mortgages are also known as no-deposit mortgages, zero deposit mortgages and 0% deposit mortgages. They’re typically aimed at first-time buyers, but are available to other types of buyers too.

How does a 100% mortgage work?

A 100% mortgage means borrowing the entire purchase price of a home without paying a deposit.

You’ll still need to pay for legal fees, a homebuyer’s survey, any mortgage fees and stamp duty, if it’s payable.

 

How have no deposit mortgages changed?

100% mortgages were much more easily available before the financial crisis in 2008. But since then, lenders have been unwilling to take the risk of offering this kind of mortgage.

Following the crisis, the Financial Conduct Authority introduced new affordability rules. These are designed to ensure that borrowers can manage their mortgage repayments.

Lenders now pay more attention to each customer’s whole financial situation, rather than simply relying on how much the borrower earns. It’s not easy to find lenders willing to offer 100% mortgages, though some are still available.

Can I get a mortgage with no deposit?

Yes, but it can be tricky. No deposit mortgages are no longer widely available, although some lenders do offer them. If you need a 100% mortgage it can be a good idea to talk to a mortgage broker who can look at all the mortgages available to see if any are on offer.

If you’re offered a mortgage without a deposit, it’s likely to be either a guarantor mortgage or a family deposit mortgage.

Guarantor mortgage

100% mortgages are usually guarantor mortgages. With a guarantor mortgage you may be able to get a mortgage even if you have no deposit, a poor credit score or little credit history.

With this type of mortgage, you’ll need to find a trusted family member or friend who’s willing to take responsibility for the loan if you can’t keep up with the repayments.

If you can’t meet your repayments, your mortgage lender will expect your guarantor to cover the shortfall and may even repossess their home if they too can’t repay what you owe. This is known as using a property as security.

As with a typical mortgage, repayments will be monthly over an agreed term (number of years). But you’ll probably be charged a higher interest rate, as you won’t have paid for even a small proportion of your home, which represents a greater risk to the lender. This can make repayments very expensive.

Family deposit mortgages

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

How it works is that your relative deposits cash, usually between 10% and 20% of the property’s value, in a designated savings account (which will pay them interest in the normal way). They won’t be able to withdraw any of their money until the end of a stated period – say, five years. This is known as using savings as security.

If you meet the repayments and any other conditions for the stated period, the money is returned to your relative. If you default, however, this money is used to meet your repayments.

Instead of savings, your family might put up their own home as security. If you don’t keep up payments on your mortgage, as well as your home being sold to repay the debt, your guarantor’s home could be sold as well to make up for any shortfall.

Which lenders offer family deposit mortgages?

Lenders who offer family deposit mortgages include Barclays Bank, Halifax Building Society, Lloyds Bank and the Mansfield Building Society.

It’s possible that other lenders may now follow suit and consider offering 100% mortgages again.

What are the advantages of a 100% mortgage?

The main advantage of a 100% mortgage is that it lets you buy a home without having to save for a deposit. This means:

  • You need less cash up front to buy a property. 
  • You can get on the property ladder sooner and buy the home you want before property prices rise even higher.
  • You can buy a modest-sized property, then potentially move to a bigger home further down the line.
  • You can start to build up equity in your home, which means that once your introductory mortgage deal comes to an end, you could remortgage to a better deal.

What are the disadvantages of a 100% mortgage?

There are several pitfalls you need to be wary of:

  • 100% mortgages tend to be expensive. The best interest rates are reserved for those with high deposits, but even a 10% deposit can give you a better choice of deals and lower rates.
  • You run the risk of slipping into ‘negative equity’ – a situation where your property is worth less than the amount you’ve borrowed against it. If you’ve borrowed 100% of the property’s value, even a modest fall in house prices would leave you in this position.
  • Taking on a 100% mortgage using a guarantor is a big decision that requires serious thought by everyone concerned.
  • If your family contribute to a family deposit mortgage, they won’t be able to access their savings for a set period of time.

If you opt for a 100% mortgage, it’s usually an indicator that things are tight for you financially. Make sure you’re not too stretched. And if you’re not on a fixed rate, consider how you’d manage if interest rates rise.

Think carefully before securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Are 100% mortgages available for first-time buyers?

Yes, you can still find a 100% mortgage for first-time buyers, but it’s likely to be a guarantor mortgage or a family deposit mortgage. Even then, a lender might turn down a first-time buyer with no deposit if you’re seen as too much of a risk.

What are the benefits of putting down a deposit?

Even putting down a relatively small 5% deposit has potential advantages for homebuyers including:

  • Lower monthly payments as you won’t have borrowed so much money
  • Potentially a lower interest rate, making payments more affordable
  • Less interest paid over the life of the mortgage
  • More mortgages to choose from
  • More equity in your property right from the start
  • A better chance of being accepted for a mortgage by lenders.

The bigger the deposit, the better the deal you’ll likely be able to access. It can be difficult to save for a deposit, but doing so can certainly widen your options and reduce your financial risks.

What are the alternatives to a 100% mortgage?

Alternatives to a 100% mortgage include:

Government schemes

If you’re a first-time buyer, you could get help from the government to get on the housing ladder. There’s a variety of schemes, including:

  • The Mortgage Guarantee Scheme to help those with small deposits get on the housing ladder, has been extended until June 2025.
  • A bonus of 25% (up to a maximum of £1,000 per tax year) on savings in a Lifetime ISA to help you save for a deposit on a home or for your retirement.
  • Equity loans available if you want to build your own home.
  • Shared Ownership options to allow you buy a share of a shared ownership property (between 25% and 75%) and pay rent to your local authority, housing association or housing developer on the rest.

Gifted deposits

Instead of acting as a guarantor, a family member could help you out by gifting you the money you need for a deposit. With some lenders, there’s a limit to how much of the deposit can be gifted.

A few providers allow existing customers to borrow against the equity in their home and gift that money to a family member as a deposit.  

Find out more about gifted deposits.

New-build developer loans

Property developers sometimes give the option to borrow money from them for a deposit on a new home they’ve built. You then pay back an agreed amount over a set timeframe.

It’s important to remember, though, that you’re paying this back on top of your mortgage payments, so you’ll need to be confident this is affordable for you.

There’s also the Deposit Unlock scheme run by property developers. Available to first-time buyers and home-movers, the scheme allows you to buy a new-build property with a five per cent deposit. It’s available on a range of properties that cost up to £833,250.

Compare mortgages

When you search for mortgage deals with us, we’ll do the hard work for you. Just tell us how much the property you’d like to buy is worth and how much you want to borrow, and we’ll show you what’s on offer. Compare now and find a mortgage that suits you.

If you need more guidance on 100% mortgages, we’ve partnered with London & Country Mortgages Ltd (L&C)** to provide you with fee-free mortgage advice. Get in touch with one of their advisers here.

About London & Country Mortgages Ltd (L&C)

**London & Country Mortgages Ltd (L&C) are a multi-award winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).
L&C are not part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria. L&C will not charge you a broker fee should you decide to proceed with a mortgage.

Frequently asked questions

How do I apply for a 100% mortgage?

You can apply for a 100% mortgage either through a mortgage broker or by contacting the lender directly. Eligibility criteria can vary among lenders, so it’s important to check their terms and conditions before you apply.

It’s very likely that you’ll need someone who’s willing to act as a guarantor or have a family member who’ll let you use their savings as a deposit. Plus, you’ll need to go through the same affordability and credit checks as you would with any type of new mortgage.

Can I get a no deposit mortgage with bad credit?

It’s possible, but unlikely that you’ll get a 100% mortgage with poor credit. You’re more likely to be approved if you have a good credit score, low levels of debt and a regular income.

Lenders will need to see evidence that you’ll be able to afford your monthly repayments when deciding whether to approve your application.

It’s always worth trying to improve your credit score before applying for a mortgage. This can help to boost your chances of being accepted.

Can I get a 100% mortgage without a guarantor?

There are now a few 100% mortgages without a guarantor. To have a chance of getting one, you’ll need to provide evidence that you can afford your payments, such as showing you’re making your rent payments and other debit/credit payments in full and on time.

A mortgage broker should be able to help you work out what options are available.

What should I do if I can’t get a 100% mortgage?

​​​If you’re unable to get a 100% mortgage, you could try to save for a deposit to get a 95% mortgage on a small property or one in a cheaper area

If a family member isn’t able to act as a guarantor but still wants to help you out, you have a couple of options. You could use their savings on a temporary basis or they could permanently gift you the deposit.

If your applications are being rejected because of a poor credit score, you’ll need to look into how you can improve it.

Car Finance 247 Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged over 18 or over. Credit is subject to status and eligibility.

Looking for a mortgage?

Compare mortgages in minutes to see if you can save.

Compare now

Sajni Shah - Consumer expert on utilities and money

Sajni is passionate about building products, allowing Compare the Market to help you make great financial decisions. She keeps track of the latest trends and evolving markets to find new ways to help you save money.

Learn more about Sajni

Compare mortgages quickly and easily Start comparing