Mortgages With No Deposit

If you’re a first time buyer, one of the biggest hurdles is saving enough money for a deposit. It can be demotivating, especially if you’re paying lots of money on rent each month.

While nearly all mortgage lenders will need a deposit before you can get on the property ladder, you might have some specialist options if you’re struggling to save.

Can you get a mortgage with no deposit?

0% deposit mortgages are extremely rare at the moment with just one mortgage lender in the UK currently offering them as part of their suite of products. That’s because we’re currently in a period of economic uncertainty, and 100% mortgages are usually only available when the country is experiencing a time of economic stability. 

To qualify for 0% deposit your application would need to be extremely strong, with a perfect credit score, flawless employment record and a high level of disposable income to comfortably cover the mortgage repayments.

Despite this, there are more and more mortgage lenders offering lower deposit requirements as part of their product range. Even with just a 5% deposit there’s plenty of options available.

Why do mortgage lenders ask for a deposit?

Your home is probably the biggest purchase you’ll ever make. And most of us don’t have that kind of money sitting around in our bank account. That’s where a mortgage comes in. Deposits are a way of showing a commitment to a mortgage lender, and means they’re more likely to trust you with such a big loan. 

Before the housing market crashed in 2008, lots of lenders gave out mortgages without a deposit, that covered 100% of a property’s value. This was often done without checking whether the person applying could actually afford the repayments, or how they would cope if their circumstances changed. 

When house prices fell, many people were left owing far more in mortgage repayments than their houses were worth, known as negative equity.  

Now, mortgages are heavily regulated, and lenders are much more cautious. Smaller deposits mean bigger loans, and that’s a risky investment for a lender. That’s why you’ll nearly always need to pay a deposit of at least 5% to take out a mortgage. 

Mortgage options with no deposit

If you’re struggling to save for a deposit, there are some more bespoke options if you fit the requirements. It’s important to remember that without a deposit, you’re less likely to get the lowest interest rate deals. It’s a good idea to work with a specialist mortgage broker who can look at your situation and explain the options. 

Guarantor mortgages with no deposit

If you don’t have a deposit and need a mortgage, you could consider a guarantor mortgage. Which means someone else agrees to legally pay your mortgage if you're no longer able. It can also, potentially, be available with a 0% deposit as the guarantor’s financial assets (usually their property) can be used as security for the loan instead.

This is a serious commitment, as your guarantor's home will be secured against a part of your mortgage. This means they’ll have to pay any outstanding costs if your house is repossessed and sold by the bank. They could also be putting their own home at risk by placing it as security against the guarantor mortgage loan.

This can be a great option if you’re a first-time buyer and can’t save for a deposit, but you probably won’t get the best mortgage rates. Usually, mortgages with the best interest rates are offered with larger deposit requirements.

Right to Buy mortgages with no deposit

If you’re a council tenant in England, you could be eligible to purchase your home through the Right to Buy scheme. Right to Buy lets you buy your council home for a discounted price.

Most mortgage lenders won’t require a deposit to give you a Right to Buy mortgage, they’ll use the discount you receive as a deposit. However, some lenders might ask you to put down some cash up front (around 5-10% of the property value) regardless of the Right to Buy discount.

Because of this, the Right to Buy scheme is a good way to get on the property ladder if you have a low income or can't save a lot of money.

Mortgage options with a small deposit

If you can manage to save just a small deposit, you have a few options to help you get on the property ladder:

Shared Ownership

Shared Ownership is where you buy part of a property and rent the rest. You take out a mortgage on the bit you're buying, then pay a reduced rent on the bit you don't own. You’re able to buy between 25-75%, and can buy some or all of the remaining share when you can afford to. 

This means you only need to put a deposit down on the bit that you’re buying, rather than the cost of the whole home. 

5% deposit scheme

Also known as the mortgage guarantee scheme and available until 30 June 2025, it allows you to get a mortgage with just 5% deposit. With the government helping mortgage lenders with part of the loan, it means you won’t have to save for a large deposit, or be restricted to new-build homes in order to get on the property ladder.

Buy with friends or relatives

Buying a house with friends or a family member is becoming a popular way to get on the property ladder. Combining deposits and sharing all the monthly living expenses can be appealing. 

It’s a big commitment though - you'll be jointly responsible for the mortgage payments. If one of you can't pay, you'll have to cover the cost. You also can't sell the property unless everyone on the mortgage agrees.

Gifted deposits

If you’re struggling to save for a deposit but have family that can help, then you could look at using a gifted deposit. You can’t technically ‘borrow’ a deposit from a family member, but it can be ‘gifted’. 

Lenders will want to know that you won’t have to pay back a deposit on top of your other outgoings. You might have to provide written evidence, signed by the person giving the deposit money to you.