How to Buy a Home Without a Deposit

If you’re struggling to fund a deposit to buy a property, a no-deposit mortgage might be your best option. A no-deposit mortgage allows you as an aspiring homeowner to work your way up on the property ladder.

However, before trying to get a mortgage with no deposit, it’s important to understand how these types of mortgages usually work and the range of options available. To learn more about buying a home in the UK without a deposit, continue reading.

What is a No-Deposit Mortgage?

Before thinking about buying your own home, it’s important to understand the different mortgage options available, especially a zero-deposit mortgage.

A no-deposit mortgage, typically known as a 100% loan-to-value (LVT) mortgage, is a mortgage option in the UK that allows you to borrow the entire value of a property without having to put down an upfront deposit.

For many, a no-deposit mortgage is the most suitable option when buying a house. Saving a deposit for a house can be difficult, which leads people down the route of no-deposit mortgages. There are two key points regarding no-deposit mortgages in the UK:

• A no-deposit mortgage enables both first-time buyers and a range of other eligible borrowers to buy a property without a deposit. However, deposits vary but typically 5% of the property value is required.
• Zero-deposit mortgages were reintroduced last year, in 2023. It has been rare to find a no-deposit or low-deposit mortgage option since the financial crisis back in 2008.

Different Types of Zero-Deposit Mortgages

If you require a no-deposit mortgage, you’ll be pleased to know that there are several different types to consider. From 100% mortgages to guarantor mortgages, you can find which is best suited for your circumstances.

Although buying your first property is exciting, the financial side can cause some worry for many individuals. Home value does vary, with more inexpensive options available across the market. However, it’s not uncommon for people to put off buying a property due to costs.

With household bills to pay, insurance, and other monthly outgoings to think about, buying a property is a big decision. Popular no-deposit mortgage options include:

100% LTV Mortgage

This is the amount you borrow through a 100% mortgage with no deposit is equal to the entire value of your chosen property. For example, if you want to buy a house priced at £200,000, the mortgage will also be £200,000. However, this option usually puts you in the negative equity zone.

Guarantor Mortgage

A guarantor mortgage allows you to get a mortgage with no deposit and even a bad credit score in some cases. A mortgage guarantor is often someone close to you, like a family member or friend, who is willing to cover mortgage payments for you if you’re unable to.

Joint Mortgages

This niche mortgage type allows more than one person (up to four people) to pay monthly repayments on one mortgage. However, only one borrower can be the legal owner of the property, even though it’s technically a joint mortgage.

Shared Ownership Schemes

These schemes are really helpful for those who can’t afford to buy a home outright, a shared ownership scheme is a part-buy, part-rent scheme that offers a way to buy shares in a home. It also allows the option to buy more shares or even purchase the property outright if you find yourself in a position to do so.

How to Get a Mortgage With No Deposit

It’s pretty rare to get a mortgage with no deposit – although it’s not impossible, which is good news. With most no-deposit mortgages disappearing from the market back in the late 2000s, we imagine it’s been difficult for people wanting to buy a home with no deposit.

That’s until Skipton Building Society launched its 100% LTV mortgage, also known as a track record mortgage. We found some key information about Skipton’s track record mortgage:

• No cash deposit is necessary
• There is no completion fee
• Fixed five-year rate
• Track record of rent payments

Additionally, Barclays offers a Family Springboard Mortgage. Slightly different from Skipton’s track record mortgage, Barclays Family Springboard Mortgage works for aspiring home buyers:

• It allows you to borrow money from a friend’s or family member’s savings account and they’ll eventually be given their money back with interest.
• Provides the security of knowing your mortgage payments won’t change over time.
• Lets you borrow the full property purchase price.
• You can pay mortgage repayments over a long-term period.

Eligibility Criteria for a No-Deposit Mortgage

Certain factors determine whether or not you’re eligible for zero-deposit mortgages. Eligibility criteria for no-deposit mortgages vary depending on your mortgage lender. However, most applicants must be over the age of 21 and have a good credit score.

With Skipton Building Society offering a promising option for those looking to get a mortgage with no deposit, you’ll need to ensure that you pay rent on time for a chance of being accepted. If this is your first time buying a property, we recommend working with a mortgage broker.

Finding Your Dream Property With Liam Gretton

We understand that the financial side of buying a property can be complex at times. At Liam Gretton, we aim to relieve some of the stress you might have experienced during the mortgage stage by providing expert estate agent services like no other.

Our invaluable team of property specialists helps clients buy and sell their homes. If you’re looking for your dream property on the Wirral Peninsula, you’ll be glad to know that we can help. With years of experience and knowledge behind us, you can trust us to find an ideal, humble abode for you to reside in.

We have an extensive range of diverse properties across our site, located in numerous locations. Each property is suitable for all house hunters – whether you’re living alone or with your family. To find out more about our services, please don’t hesitate to get in touch today.