No Deposit Mortgages – A Guide for First-Time Buyers

Buying your first home is an exciting milestone, but saving up for a deposit can feel like an uphill battle. That’s where a no-deposit mortgage comes in. This type of mortgage deal offers a way to step onto the property ladder sooner without having to save thousands upfront for a mortgage deposit. But is it the right choice for your home-buying journey?

This article will explain what you need to know about no-deposit mortgages, who they’re for, the risks and benefits, and alternative options available to first-time buyers and existing homeowners. By the end, you’ll be equipped to make an informed decision about your next move.

What Is a No Deposit Mortgage?

A no-deposit mortgage, also known as a 100% loan-to-value (LTV) mortgage, is a type of home loan that allows you to purchase a property without putting down any upfront deposit. Essentially, it lets you borrow the full value of the house, making it a game-changer for buyers struggling to save for a deposit.

These mortgages are rare in the UK, but some lenders now offer products aimed at renters and first-time buyers. To qualify, you’ll typically need a strong credit rating, stable income, and a good history of paying rent.

Who Is a No Deposit Mortgage For?

No-deposit mortgages aren’t suitable for everyone. However, they can be an excellent option for:

• First-time buyers who are eager to get on the property ladder but struggle with saving for a deposit.
• Renters with a track record of making regular payments that are similar to what their mortgage repayments would be.
• Individuals with strong financial stability but without savings due to high living costs or other obligations.

It’s important to note that lenders will still assess your ability to afford monthly repayments, so they’ll look at your income, expenses, and credit history.

How Much Deposit Would Normally Be Required?

For most mortgages in the UK, you’d need at least a 5% minimum deposit to secure a property. For example:

• A £200,000 house would require a deposit of £10,000 for a 5% deposit mortgage.
• Buyers often aim for larger deposits (10% or more) to secure better interest rates and a reduced loan amount.
• The most competitive rates typically go to buyers with deposits of up to 40% (e.g., £80,000 for a £200,000 property).

No deposit mortgages eliminate the need for upfront savings, but they come with higher risks and potentially less favourable terms.

Key Considerations: No Deposit Mortgages

If you’re considering a no-deposit mortgage, it’s important to weigh both the benefits and the risks carefully.

Benefits

Easier Access to Homeownership
You can get on the property ladder without needing to save for a large deposit — ideal if you’re currently renting or struggling to build savings.

Faster Purchase Timeline
With no need to save a deposit, you could move into your new home much sooner.

Rental History Can Help
Some lenders may accept a strong history of rental payments as proof of reliability, helping you qualify even without savings.

No Early Repayment Charges

Borrowers using a no-deposit mortgage are exempt from early repayment charges and can make unlimited overpayments on their loan using their personal funds.

Risks & Challenges

Higher Monthly Payments
Borrowing 100% of the property’s value means larger monthly payments compared to first-time buyers with a deposit.

Higher Interest Rates
Lenders often charge higher interest rates for first-time buyer mortgages with no deposit, increasing the long-term cost. Even a small deposit may reduce long-term costs while still providing a lower barrier to home

Negative Equity Risk
If house prices fall, you could end up owing more than your home is worth, and you may not be able to afford to move or remortgage.

Stricter Lending Criteria
Because no-deposit first-time buyer mortgages are perceived as high-risk, most lenders will scrutinise your credit score and financial history more closely. This is usually discussed at the Decision in Principle stage of the application process.

Credit Score Requirements

Having a strong credit score is essential. Since you’re not putting any money down, lenders need to see a solid record of managing credit responsibly.

Alternative Mortgage Options

If a no-deposit mortgage doesn’t feel right for you, there are other pathways to your first mortgage.

Guarantor Mortgage

A family member or close friend acts as a guarantor, using their savings or assets as security for your loan. While this reduces your deposit requirement, it’s a big responsibility for the guarantor and comes with its own risks.

Shared Ownership

Buy a percentage of a property (often 25% to 75%) while paying rent on the remaining share owned by a housing association. You’ll only need a deposit for the share you’re buying, not the full property value.

For example, buying 50% of a £300,000 property would require a deposit for £150,000 (the value of your share), making this path more affordable.

Joint Mortgage

Combine incomes with a partner or friend to apply for a joint mortgage. Splitting costs and pooling savings rather than borrowing the full amount yourself makes it easier to reach the required deposit amount and achieve home ownership.

Right to Buy Scheme

If you’ve lived in a council home for three or more years, you may qualify to purchase your first home at a discounted price. Some lenders even allow you to use this discount instead of a deposit.

Help to Buy Scheme (Wales)

This government-backed initiative, available until 2026, offers a shared equity loan of up to 20% of a property’s purchase price. Buyers only need a 5% deposit and a repayment mortgage for the rest, making it easier to secure a home.

How Eden Hawk Can Help

For first-time buyers struggling to fund their first home purchase, the mortgage process and the costs involved can be confusing, and you may not be aware of all the options available. At Eden Hawk Financial Solutions, we’re here to simplify the process and help you find the most suitable mortgage for your needs.

Whole Market Access

We’re not tied to any specific lender, meaning we can search the entire market for the best options.

Step-by-Step Guidance

Our team walks you through every step, from evaluating your credit profile to determining affordable monthly repayments.

Tailored Advice

We craft personalised mortgage recommendations based on your circumstances, ensuring a stress-free experience.

Whether you’re interested in a no-deposit mortgage, a guarantor mortgage, or any other option, Eden Hawk will give you the extra support you need to make confident and informed decisions.

Making the Right Choice for Your Future

A no-deposit mortgage offers an exciting opportunity for first-time buyers to achieve homeownership without saving for years. However, it’s essential to weigh the risks, benefits, and alternative options to decide if it’s the right path for you.

Need help getting started? The team at Eden Hawk is ready to guide you through the process and explore the most suitable mortgage solutions for your needs.