Key Facts
- Primary keyword: no deposit mortgage - independent editorial guide, no commission
- Primary sources: FCA, gov.uk, Money and Pensions Service
- Last reviewed June 2026
What Is a No Deposit Mortgage?
A no deposit mortgage allows a buyer to borrow the full purchase price of a property without putting down any cash, with the lender providing 100 percent of the funds required. With a no deposit mortgage the buyer has no equity stake at the point of purchase, meaning the lender carries the full risk of any fall in property values.
No deposit mortgages largely disappeared after the 2008 financial crisis due to the risks of negative equity. A small number have returned, most notably Skipton Building Society's 100 percent no deposit mortgage launched in 2023, designed specifically for renters with a consistent 12-month payment history.
The monthly payment on a no deposit mortgage cannot exceed the average rent paid over the previous six months under the Skipton product terms. This criterion narrows eligibility to renters whose rental costs are broadly equivalent to the mortgage costs for the same property.
How No Deposit Mortgages Work
In a no deposit mortgage, the lender provides a loan equal to 100 percent of the purchase price. Because there is no equity buffer, no deposit mortgage interest rates are higher than rates available to borrowers with a deposit - typically 1 to 2 percentage points above equivalent 75 percent LTV products.
Some products described informally as no deposit mortgages involve a third-party deposit rather than no deposit at all. Family springboard mortgages use a relative's savings in a linked account as security, allowing the buyer to proceed without personal savings. These are no deposit mortgages in the sense that the buyer contributes nothing, but the household overall does provide security.
The additional interest cost of a no deposit mortgage relative to a product with a 10 percent deposit can amount to several thousand pounds per year. On a 200,000 pound no deposit mortgage at a 1.5 percentage point premium, the extra annual cost is approximately 3,000 pounds compared with a 90 percent LTV product.
No Deposit Mortgage Risks: Negative Equity
The main risk of a no deposit mortgage is immediate negative equity if property values fall. With a no deposit mortgage there is no initial equity cushion - a 5 percent fall in property values immediately puts the borrower 5 percent into negative equity.
Negative equity on a no deposit mortgage prevents remortgaging to better rates from a new lender, trapping the borrower on the original lender's SVR or current product rate until values recover or capital repayments build a positive equity position.
Land Registry data shows periods of national property price falls, including falls of 15 to 20 percent in some regions between 2007 and 2009. No deposit mortgage borrowers in markets that have risen rapidly face proportionally greater risk if those markets correct.
No Deposit Mortgage Alternatives
The Mortgage Guarantee Scheme supports lenders offering 95 percent LTV mortgages with a government guarantee. This allows buyers to proceed with a 5 percent deposit rather than using a no deposit mortgage, and is available from a wider range of mainstream lenders.
Shared ownership reduces the deposit requirement significantly compared with a no deposit mortgage on full ownership. A 10 percent deposit on a 25 percent share of a 250,000 pound property is 6,250 pounds, a fraction of the amount required for full ownership.
Lifetime ISAs allow first-time buyers under 40 to save up to 4,000 pounds per year and receive a 25 percent government bonus. Over three years, consistent contributions produce 15,000 pounds including the bonus - enough for a 5 percent deposit on a 300,000 pound property without needing a no deposit mortgage.
No Deposit Mortgage Eligibility Criteria
No deposit mortgage eligibility in the UK is typically restricted to: first-time buyers only; borrowers with a 12-month history of on-time rental payments; those whose proposed mortgage payment does not exceed existing rental costs; and properties of standard construction.
Credit history requirements for a no deposit mortgage are strict. Most providers require a clean credit file with no missed payments, defaults or county court judgements in the preceding three years. The absence of equity means the lender has no fallback beyond the property itself.
Income multiples for a no deposit mortgage are typically more conservative than for equivalent products with a deposit. The narrow eligibility criteria reflect the heightened risk for both lender and borrower. Those who cannot meet no deposit mortgage criteria are generally better served by saving a deposit or using shared ownership.
Understanding the True Cost of a No Deposit Mortgage
Borrowers considering a no deposit mortgage should calculate the total cost over a five-year horizon and compare it with the cost of renting for two to three years while saving a deposit. In rising markets, acting sooner with a no deposit mortgage can be cheaper in total; in flat or falling markets, waiting and saving a deposit may produce a better outcome.
The rate premium on a no deposit mortgage, combined with the risk of negative equity limiting remortgage options, means the true cost of a no deposit mortgage extends beyond the headline monthly payment. A mortgage adviser can model the total cost comparison including the opportunity cost of saving versus purchasing with a no deposit mortgage.
Free financial coaching from organisations such as StepChange and Citizens Advice can help borrowers with complex situations identify the most realistic route to homeownership given their specific circumstances, including whether a no deposit mortgage or an alternative approach is most appropriate. Borrowers considering a no deposit mortgage should run the total cost comparison over a five to ten-year horizon rather than focusing solely on the monthly payment. The rate premium, negative equity risk, and limited remortgage options associated with a no deposit mortgage mean the true cost is substantially higher than the headline payment suggests.
Disclaimer: This guide is for informational purposes only and does not constitute financial advice. Mortgage products, eligibility criteria and regulations change frequently. Consult an FCA-authorised mortgage adviser before making any decision. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority.
Frequently Asked Questions
Are no deposit mortgages available in the UK in 2026?
A small number of no deposit mortgage products are available from specialist lenders, primarily for renters with a consistent 12-month payment history. The Mortgage Guarantee Scheme supports 95 percent LTV products requiring a 5 percent deposit from mainstream lenders.
What are the risks of a no deposit mortgage?
The main risk of a no deposit mortgage is immediate negative equity if property values fall. No deposit mortgage interest rates are also typically higher than products with a deposit, increasing the monthly cost.
Can a first-time buyer get a no deposit mortgage?
The available no deposit mortgage products are generally restricted to first-time buyers. Eligibility also requires a rental payment history, a clean credit file, and a mortgage payment that does not exceed current rental costs.
Is it better to use a no deposit mortgage or save a deposit?
A no deposit mortgage allows earlier purchase but at higher rates and with negative equity risk. Saving a deposit, particularly through a Lifetime ISA with the government bonus, typically produces lower long-term costs and avoids no deposit mortgage rate premiums.
Can family members help with a no deposit mortgage?
Family springboard mortgages allow a family member to place savings as security, enabling a buyer to proceed without personal savings. These are sometimes called no deposit mortgages in practice, though the family is providing security rather than a gift.
Sources
Last reviewed June 2026 by Chandraketu Tripathi, Finance Editor, Kaeltripton.com
