You can get a 100% LTV mortgage with no deposit (or equity) at all – but only if you already have a mortgage with the lender, or if you have a guarantor who can provide security.
Put simply, a 100% LTV (loan-to-value) mortgage is a loan for the full value of a property. So, if you bought a £200,000 home with a 100% LTV mortgage, you’d borrow £200,000 from the lender.
Most mortgages are not 100% LTV – usually you would provide some of your own money, either via a deposit or, in the case of remortgaging, equity in your home. A more conventional 90% LTV mortgage, for example, would require you to contribute a deposit of 10%, or £20,000, if you want to buy that £200,000 home.
As always with mortgages, the higher the LTV, the higher the interest rate – and 100% LTV mortgages generally have comparatively high interest rates. Saving up a larger deposit will give you access to mortgages with a lower rate of interest, which significantly reduces your total repayments over the full term.
If you want a 100% LTV mortgage, almost every lender will require that you’re an existing customer (i.e. you’re remortgaging), or that you have a guarantor. The guarantor will have to provide enough security to satisfy the lender, which is usually in the form of cash savings or, in fact, the guarantor’s own home.
If you don’t have a deposit, don’t own a home, and don’t have a guarantor, then the chances of you purchasing a property are very slim.
Your best bet is to either take steps to help you save up for a deposit, or use a government scheme such as Help to Buy: Shared Ownership. Shared ownership lets you buy a percentage of the property initially – between 25% and 75% – and thus you won’t need such a large deposit. Over time you can buy more of the property until you own the whole thing.
Here’s an example of how it works: for a 25% share in a £300,000 home, you would only need to raise enough of a deposit for £75,000. For a 95% LTV first-time buyer mortgage (where you only require a 5% deposit), you’d need just £3,750.
Only newly built properties qualify for the government’s Help to Buy scheme, so there aren’t that many shared ownership properties on the market – and they get snatched up quickly.
Technically, yes, but it’s far from ideal and certainly not desirable. Where you’d need a mortgage with an LTV higher than 100% is if you’re remortgaging, and in negative equity because your house value has dropped to below the mortgage amount.
For example, if you have a mortgage for £200,000 but your home has gone down in value to £180,000, you would need to find a mortgage with an LTV of about 111%.
Alternatively, try to add some of your own savings as a deposit to bring the LTV down to 100%, or ideally 95%.
Edited by: Sarah Guershon
Last updated: 2 January, 2019
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