How do no-deposit mortgages work?
How to get on the property ladder with zero savings.
In today's challenging housing market, where saving for a deposit can be a significant hurdle, no-deposit mortgages are re-emerging as a viable option for first-time buyers.
These mortgages allow individuals to purchase a home without the traditional upfront deposit, making homeownership more accessible to those with steady incomes but limited savings.
However, while they offer a pathway onto the property ladder, it's essential to understand how they work, who qualifies, and the associated risks.
What is a no-deposit mortgage?
A no-deposit mortgage, also known as a 100% loan-to-value (LTV) mortgage, enables buyers to borrow the entire cost of a property without needing to provide a deposit.
This contrasts with standard mortgages, which typically require a deposit of at least 5-10% of the property's value.
The resurgence of these mortgages aims to assist renters and first-time buyers who struggle to save due to high living costs.
How do no-deposit mortgages work?
No-deposit mortgages work by allowing buyers to borrow 100% of a property’s value without putting down any cash upfront. As mentioned in the above section, this is a sharp contrast to traditional mortgages, which require deposits ranging from 5% to 20% or more.
These types of mortgages were nearly wiped out following the 2008 financial crash due to the risks they posed for both borrowers and lenders. However, in response to rising rent costs and slow wage growth, a small number of lenders are now reintroducing them with stricter eligibility rules and risk controls in place.
Instead of relying on a buyer’s savings or family support, modern no-deposit mortgages base their approval on other indicators of financial reliability, primarily a strong history of paying rent on time. Here’s how they work in practice:
Affordability is linked to rent payments
The most prominent innovation in today’s no-deposit mortgages is how lenders assess affordability. Rather than using generic income multiples or simply looking at payslips, lenders like Skipton Building Society use applicants’ rental history as proof that they can consistently manage a monthly payment.
If you’ve paid £1,000 per month in rent for the past year, and the mortgage payment would be equal to or less than that, your application may be considered viable—provided other financial checks are passed.
This approach aims to reward responsible renters who may not have the means to save due to high living costs but can clearly afford monthly repayments. It's particularly beneficial for long-term renters in urban areas, where rent often exceeds the cost of a mortgage.
Credit history and financial health are crucial
While you may not need a deposit, you absolutely do need a solid credit history. Lenders will scrutinize your financial background for missed payments, outstanding debts, and any signs of financial distress. Applicants with County Court Judgements (CCJs), recent defaults, or payday loans on their record are very unlikely to be accepted.
A stable income and job history will also be taken into account. Lenders want assurance that your financial circumstances are consistent and sustainable. Some may also assess your bank statements for spending habits, overdraft use, and savings behaviour to ensure you aren’t overextending yourself.
Not all properties qualify
Even if you meet the financial and credit criteria, not every property will be accepted under a no-deposit mortgage scheme. Lenders often restrict certain types of housing due to the risk involved.
For example:
New-build flats are typically excluded, as they tend to depreciate in value initially.
Non-standard construction homes (like timber-framed or prefabricated homes) might not qualify.
Properties located in high-risk postcodes—those prone to flooding or with historical valuation issues—may also be rejected.
Lenders are especially cautious about ensuring the property provides sufficient security for the loan, since with no deposit, there’s less of a financial buffer if the borrower defaults.
Who offers no-deposit mortgages in 2025?
Several lenders have introduced no-deposit mortgage products to cater to the needs of prospective homeowners:
Skipton Building Society: Their 'Track Record Mortgage' is designed for first-time buyers who can demonstrate a history of timely rent and bill payments. Applicants must be at least 21 years old, have rented for 12 consecutive months, and the monthly mortgage payment must not exceed their average rent over the past six months. No guarantor is required, and the maximum loan amount is £600,000.
April Mortgages: Offering 100% mortgages with fixed rates starting at 5.99% for 10 or 15 years, April Mortgages targets UK residents with a minimum household income of £24,000. Applicants must be under 70 years old (not older than 80 at the end of the mortgage term) and are looking to buy or remortgage a house valued at more than £75,000. Flats and new build properties are excluded.
Gable Mortgages: This lender provides five-year fixed-rate 100% mortgages at 5.95% for standard properties and 5.65% for new builds. Applicants must be at least 23 years old, borrow a minimum of £125,000, and key workers may benefit from higher income multiples.
These lenders are examples where a buyer can opt for an standard LTV mortgage. What we mean by that is, there are other lenders who offer 100% LTV’s but may require a guarantor – either a family member or friend to provide security should you fall behind on payments.
In those cases, they aren’t fully no-deposit for all involved as the guarantor may have to put something down as collateral or pay some fee. But this may still mean the buyer doesn’t have to pay anything, allowing you to get on the ladder without any upfront deposit.
In these cases, you will find that some highstreet banks will have some kind of offering. Barclays offers a Family Springboard Mortgage, which sees a family or friend (supporter) deposit 10% of the purchase price into a linked savings account for five years.
Over that time, as long as the buyer has successfully made their mortgage payments on time, the supporter will get their deposit back in full plus interest which had accrued during the five years.
Lloyds Bank has a very similar offering known as a Lend a Hand Mortgage. It works the same way, with a supporter fronting a 10% deposit that goes into a savings account and they will get that money back in full plus interest if the buyer successfully makes their mortgage payments. The only difference is that the money is kept in a savings account for three years.
Benefits of no-deposit mortgages
No-deposit mortgages are on the rise once again and are becoming an increasingly attractive option for young and first-time buyers. There are multiple benefits to choosing one, more than the fact that you won’t pay a thing upfront.
Makes homeownership accessible
For renters who can afford monthly payments but haven’t been able to save for a deposit, these products offer a way onto the housing ladder without relying on family gifts or years of saving. This is especially valuable in high-rent areas where saving £10,000+ isn’t realistic.
Reward for consistent renters
Lenders like Skipton mentioned earlier and its Track Record Mortgage base eligibility on rental payment history, not just income multiples. This rewards renters who’ve proven they can manage their finances but haven’t benefited from rising home equity or family wealth.
Potential long-term savings
If the mortgage payment is lower than rent, buyers could start saving over time. Owning also means building equity, rather than paying into a landlord’s property.
Fixed-rate certainty
Some no-deposit mortgages come with long fixed-rate periods (e.g. 10 or 15 years via April Mortgages), offering protection from interest rate hikes and making budgeting easier.
Risks and considerations
While no-deposit mortgages are appealing, they come with significant risks, particularly for those with limited financial buffers or unstable employment. Here's what to consider:
Negative equity risk
With a 100% LTV mortgage, you have no equity cushion (equity . If house prices fall even slightly, you could owe more than the property is worth. This makes it difficult to remortgage, move, or sell without losing money.
For example, say you buy a house at £200,000 with no deposit but then the value drops to £190,000. You're then in £10,000 of negative equity since you owe more than the house is worth.
Higher Interest Rates
Lenders charge higher rates to offset the risk of lending 100% of the purchase price. These rates can add thousands in interest over time compared to buyers who put down a 10–15% deposit.
Limited choice of lenders
Very few UK lenders offer no-deposit products – and even fewer do so without family backing. That means less market competition, stricter eligibility criteria, and fewer flexible terms.
Stricter affordability criteria
Since there are risks to the lenders themselves as well as the hopeful buyer, some lenders will do a deep-dive into your finances: rent history, credit score, employment type, and even discretionary spending. Even one missed payment or overdrawn bank account could derail an application.
Property type restrictions
Many no-deposit lenders exclude new-build flats, unusual construction types, and low-value or non-standard home
Alternatives to no-deposit mortgages
If you don’t qualify for a no-deposit mortgage, want to reduce long-term costs, or simply feel that the here are some alternatives that might work for you:
Low-deposit mortgages (5% - 10%)
Many mainstream lenders offer 90–95% LTV mortgages. Saving even a 5% deposit significantly widens your mortgage options and lowers your interest rate.
Family-backed mortgages
Examples such as the ones from Barclays (Family Springboard Mortgage) and Lloyds Bank (Lend a Hand Mortgage) are great alternatives so long as you have a happy and willing guarantor to help.
Shared ownership
You buy a share of a property (usually 25% - 75%) and pay rent on the remainder, often to a housing association. You’ll need a smaller deposit based on your share, not the full property price. Lower entry costs, but monthly rent adds to your outgoings.
First Homes scheme
This government scheme offers eligible first-time buyers a discounted new-build home (30% - 50% off market value). You’ll need a small deposit and mortgage but benefit from a price reduction up front.
Save longer with Help to Buy ISA or LISA
If you can wait, products like the Lifetime ISA offer a 25% government bonus on your savings, up to £1,000 per year. Use it toward your first home (up to £450,000).