0% deposit mortgages: what are they and how can I get one?

Buying your own home is a dream for millions of people in the UK, yet affordability can be a huge barrier to getting onto the housing ladder. 

If you’re struggling to save up that vital deposit to make your home ownership dream a reality, one option could be a 0% deposit mortgage, also known as a 100% mortgage or no-deposit mortgage. 

We’ll explain everything you need to know about 0% deposit mortgages, including the pros and cons.

What is a 0% deposit mortgage? 

Usually, when you buy a home, you have to put down a deposit; this can be as little as 5% but is usually around 10%-20% of the property’s value. 

The bigger the deposit you have, the more likely you are to get a better rate on your mortgage. 

As the average price of a UK property was £291,000 in September, according to the Office for National Statistics, you would need £29,100 for a 10% deposit. 

With a 0% mortgage, you’re borrowing the whole value of the property you plan to buy, so no deposit is needed. 

While this mortgage is targeted towards first-time buyers, it may be available to other people. 

How does a 100% mortgage work? 

As we mentioned, a 0% mortgage is when you borrow the whole purchase price of a property without a deposit. 

While the deposit is a huge upfront expense, you’ll still need to pay for legal fees, homebuyer surveys, mortgage fees and stamp duty (if applicable), as well as moving costs. 

This can add up to thousands of pounds, so it’s worth knowing how much you need to save. 

Are no-deposit mortgages widely available? 

Before the financial crisis in 2008, 0% deposit mortgages were widely available, with Zoopla flagging that some lenders gave mortgages worth up to 125% of the property’s value. 

Following the financial crisis, no-deposit mortgages were perceived as too risky, so they became a rarity. Moneyfacts recently revealed that no-deposit mortgages only make up 0.3% of the UK market. 

Skipton made headlines in May 2023 by introducing the first truly 0% deposit mortgage since 2008. 

Skipton’s Track Record mortgage allows renters with less than a 5% deposit to borrow up to £600,000 if they: 

• Haven’t owned a property in the UK before or in the last three years. 
• Are at least 21 years old. 
• Have no missed payments on debt during the previous six months. 
• Are not planning to buy a new build flat or hoping to buy a property in Northern Ireland. 

Your rent track record will also impact how much you can borrow. 

Applicants need to prove that all rent has been paid for 12 consecutive months within the last 18 months, as well as provide evidence that household bills have been paid.  

Can I get a mortgage without a deposit, and is a guarantor required? 

While you can apply for a 0% deposit mortgage, these aren’t easily available, and you’ll likely need to apply for a guarantor, family deposit, or family offset mortgage.  

It’s worth talking to a mortgage broker who can look at what 100% mortgages are available and recommend the best one for your circumstances. Unbiased can match you to a qualified mortgage broker who will find the most competitive deal for you.  

What is a guarantor mortgage? 

A guarantor mortgage doesn’t require a deposit, and you must have a guarantor. This type of mortgage can also be an option if you have a bad credit score or no credit history.  

The catch is that if you can’t pay your mortgage, your guarantor covers your payments – and as their property is ‘security,’ the lender can sell it if neither you nor the guarantor can pay. 

A guarantor is usually a family member, but it doesn’t necessarily have to be. 

It’s vital to stress that while the guarantor is legally responsible for paying your mortgage, if you can’t, they don’t own any of your property. 

For some guarantor mortgages, savings are used as security instead of their property. So, they can pay money into a specific savings account that may also offer interest. 

The lender can access this account for missed mortgage payments, or it can be linked to the mortgage to reduce monthly payments. 

A big downside to guarantor mortgages is that rates are higher than a typical mortgage as you’re seen as a riskier borrower due to having no deposit.  

If you’ve been asked to be a guarantor for a mortgage, there are big risks to consider, so it’s worth talking to a mortgage broker beforehand.  

What is a family deposit mortgage? 

This type of mortgage requires a family member to either use their savings or property as a security for your mortgage. 

They have to pay 10%-20% of the property value into a specific savings account, which may offer some interest. This money is kept in the account for a set period of time, so they can’t access it. 

Similar to some guarantor mortgages, a mortgage lender can access this money if you fail to keep up with monthly payments and if your family member’s home is security, this can be forcibly sold (as well as your home). 

What is a family offset mortgage? 

A family offset mortgage is like a family deposit mortgage, except your family member cannot earn interest on their savings. 

Instead, this type of mortgage offsets the amount you pay against the amount in the linked savings account, so you have lower monthly payments. 

The pros and cons of 0% deposit mortgages 

There are many advantages of 0% deposit mortgages, including: 

• The upfront cost of buying your own home is a lot less, as you don’t need a deposit. You could choose a small property to get your foot on the property ladder before upsizing. 
• You can buy a property quickly if you are worried about house prices rising in the future. 
• The opportunity to build equity in your home with monthly repayments and overpayments if you choose to. 

However, there are many disadvantages to 100% mortgages, including: 

• You risk going into negative equity, where your home is worth less than you paid for it. 
• You may have a higher mortgage rate as there are not many 0% deposit mortgages available on the market. 
• You will spend more on interest as you’ll have a larger mortgage than if you had a deposit. 
• You may not buy your ideal property as you are limited in how much you can borrow. 
• Your loan-to-value (LTV) may be higher compared with a traditional mortgage, so you may get more expensive deals when you remortgage. 
• If a guarantor or family member supports your mortgage, their property is at risk if you fall behind on payments, or they may not be able to access their savings for a set time period. 

Are 100% mortgages available to first-time buyers? 

As first-time buyers are facing huge barriers to home ownership, a lot of 100% mortgages are targeted at those looking to buy their first home – but not exclusively.  

So, anyone who’s planning to remortgage or move home may be eligible. 

Why you should consider saving a deposit 

Saving for a deposit is difficult, but you can reap many benefits, such as lower mortgage rates and monthly repayments, plus you pay less interest overall and can access more competitive mortgages. 

You’ll also boost your chances of getting your mortgage approved if you have a deposit.  

What are the alternatives if you don’t qualify for a 100% mortgage? 

If you don’t qualify for a 0% deposit mortgage, here are some alternatives to consider. 

• Get a deposit gifted from a family member (or they may be able to borrow against the equity in their home so they can give you a deposit). 
• Apply for the mortgage guarantee scheme, which helps people buy a home with a 5% deposit by encouraging lenders to offer 95% mortgages. This scheme will close at the end of June 2025. 
• Apply to the shared ownership scheme, where you buy a share of the property and pay rent to a landlord. 
• Contribute to a Lifetime ISA if you’re aged 18-39. You can contribute up to £4,000 each tax year, and this is topped up by the government by 25% (up to £1,000 every year). 
• Apply for an equity loan via the Help to Build scheme if you want to build your own home. 
• Get a new-build developer loan, where the property developer allows you to borrow money for a deposit that you pay back over a specific time period. 
• Consider a joint mortgage by buying with someone else 
• Consider the Deposit Unlock scheme, where you can buy a new-build home with a 5% deposit.  

Buying your own home is expensive and can be a complex process to navigate.

Unbiased can help you find a qualified mortgage broker who can explore your options to find the best deal for you.