Compare our best 100% LTV no deposit mortgages

Compare the best 100% LTV mortgages, which you may be able to get without a deposit. 100% LTV mortgages are usually reserved for a lender's existing customers or those with a guarantor. Explore our guide to learn more about 100% LTV no deposit mortgages. Watch out: there are limited options, you'll pay a high interest rate, and no-deposit mortgages are risky for you or your guarantor.

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What is a 100% LTV mortgage?

A 100% LTV (loan to value) mortgage is a loan for the full value of a property. For a 100% LTV mortgage on a £200,000 home, you would need a £200,000 mortgage. As you do not need a deposit for a 100% LTV mortgage, they are often referred to as 0% deposit mortgages, or 100% mortgages.

The LTV percentage refers to the loan amount you need in relation to the value of a property. All mortgages with lower LTVs require a lump sum either from a deposit or home equity.

While 100% mortgages were quite common before the 2008 financial crisis, they are now harder to come by and qualify for. The risk to recoup the money is considered by many lenders to be too high.

Types of 0% deposit mortgage

There are also a few different types of 100% LTV mortgages:

  • Family offset, family springboard and family link mortgages
  • Guarantor mortgages
  • New-build developer loans (rare)

Interest rates on zero deposit mortgages

Unsurprisingly, the average 100% LTV mortgage has a higher interest rate than the average 90% LTV mortgage.

As the average house price in the UK is currently £231,000, you'd need a £23,100 deposit to qualify for a 90% LTV mortgage. With rent and living costs so high, saving so much money is not easy.

However, saving up a larger deposit gives you access to mortgages with lower rates of interest. This significantly reduces your total repayments over the full mortgage term.

How can you get a 100% mortgage without a deposit?

To get a 100% LTV (no deposit) mortgage, most lenders prefer you to already be a customer (i.e. you're remortgaging). The other option is to have a guarantor.

Being a guarantor is a big commitment, as they will have to provide enough security, such as savings or their own home, to satisfy the lender. For this reason, parents are often asked to be guarantors for a child.

Without a deposit or a guarantor, most first time buyers will not be able to get a 100% LTV mortgage – the max they could get would be a 95% LTV mortgage.

If you do not have a deposit, own a home or have a guarantor, the chances of you purchasing a property are very slim. This does not mean you cannot buy a property. But you may have to wait until you have saved a deposit of at least 5%.

To speed things along, you could reduce the size of deposit you need to find by:

  • Using the Help to Buy Shared ownership scheme
  • Getting a Help to Buy equity loan
  • Opening a Lifetime ISA

If you opened a Help to Buy ISA before November 2019, you can continue to contribute to this until November 2029. The government will top up your savings by 25% (up to £3,000) when you buy your first home and this money can be claimed until November 2030.

A family offset mortgage is almost identical to a traditional offset mortgage. But rather than linking your own savings to your mortgage, you use those of a close relative.

You effectively use their savings to “offset” your mortgage debt.

For example, you want to buy a £200,000 property but do not have the funds for a deposit. Your mother, however, has £30,000 savings. Providing her savings are held with your potential mortgage lender, you could use them as your deposit. This is the equivalent of a 15% deposit and you would only need to borrow £170,000 to buy the property.

Not all lenders offer this type of mortgage. Of those that do, the family member will usually need to be immediate family – a long lost cousin, twice removed will not suffice.

Family Springboard/Boost mortgages work by using a family member’s savings as security on your home loan. But in this case, the savings are locked away in a fixed term savings account with the mortgage lender.

The fixed term is typically between 3 and 5 years. If, after this time you have kept up with your mortgage payments, your relative will receive their savings back, with interest. Some Family Springboard mortgages will allow higher sums to be borrowed by extending the mortgage term from 25 years to 35 years.

Family link mortgages are secured against a family member's house, rather than cash in a linked account.

What are guarantor mortgages?

Guarantor mortgages also require a close family member to help reduce your mortgage loan. They could either use their own home (which they’ll most likely need to own outright), or savings as security on your mortgage. This means their home could be repossessed if you miss too many mortgage repayments.

Your guarantor needs to agree that they will pay your mortgage if you cannot meet the repayments yourself. Parents or other close relatives are the most common type of guarantor and many lenders prefer them to be a joint applicant on the mortgage.

Some lenders say only parents, grandparents or stepparents can be guarantors. They should have enough equity in their own property and/or a certain amount of income to satisfy the lender’s rules. They’ll also need a good credit history.

What are new build developer loans?

These are quite rare. But some property developers will offer you a loan for the deposit when you agree to buy one of their new build homes.

For instance, they might lend you a deposit of 20% on the condition that you repay it within 10 years.

This may help you to get better rates on the remaining 80% LTV mortgage. Remember, you have to be able to meet mortgage repayments and the loan repayments at the same time.

What are the risks of buying a house with no deposit?

The main problems with 100% mortgages are higher product fees and interest rates. Lenders can make you pay a higher lending charge when you’re buying a house without a deposit, which is a fee for borrowing with a small deposit. This gives them additional protection in case you miss payments or you fall into negative equity.

Guarantor mortgages are risky for the guarantor: if you fall behind on your monthly repayments, your guarantor must pay the lender instead. If they cannot meet the payments, they could lose their linked savings or have their home repossessed.

Negative equity

The other risk with 100% mortgages is that you could end up in negative equity if the value of your home decreases. Negative equity is where your home is worth less than the outstanding mortgage loan.

This means the lender wouldn't get their money back if you sold the house - which is a bad situation for both you and the lender.

If you're in negative equity it can be hard to remortgage to a new deal. You could become a mortgage prisoner with large monthly mortgage repayments.

Can I get a mortgage with an LTV over 100%?

Those in negative equity may need a mortgage with an LTV over 100%. For example: your mortgage is £200,000 but your home has decreased in value to £180,000. You would therefore need a mortgage with a 111% LTV.

To get out of negative equity, you could use savings to bring the LTV down to 100%, or lower. There are very few mortgage products available for LTVs over 100%, and the interest rates tend to be very high.

Watch out for fees

Some lenders may offer attractive mortgage deals, but when you scratch beneath the surface you find you will need to pay legal, valuation or administration costs that can add up to thousands.

Always find out what fees you will be charged in advance. Use the Annual Percentage Rate of Charge (APRC) to compare products as this incorporates some mortgage-related fees in its calculation.

If the best deal for you does involve fees, lenders will typically add this cost to the mortgage – meaning you could be paying interest on this money for the duration of your home loan. If you can afford to, consider asking your lender if you can pay this upfront.

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Edited by: Sarah Guershon & Sebastian Anthony

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Last updated: 23 October, 2020