Buying A House With No Deposit

Saving for a deposit is often the biggest hurdle for homebuyers. Pulling together thousands of pounds upfront can feel like an impossible task – even the minimum 5% deposit on a £200,000 home is still £10,000. But is it possible to get a mortgage with no deposit at all?

If you’re struggling to save a lump sum, here are some alternative options that could help you purchase a brand new home without the traditional deposit.

How to buy a house with no deposit

While it’s unconventional, there are ways to buy a home without putting down a traditional deposit. As a mortgage is a significant amount of money, each method has its own advantages and disadvantages. Lenders need to be sure the loan is a secure investment, so they won’t release the funds without a solid level of reassurance. It’s up to you and your independent financial advisor to determine whether the benefits outweigh the limitations. Here are a few of the options available to you if you’re considering buying a house with no deposit.

1. Sign with a guarantor

A guarantor is a third party – usually a family member or a very close friend – who agrees to take responsibility for your mortgage if you’re unable to make your repayments. For buyers with little credit history, limited proof of rent or bill payments, or a history of debt, a guarantor can sometimes be the only way to secure a good mortgage. In some cases, a guarantor can make it possible to get a mortgage with no deposit, though this option comes with important conditions. To support your mortgage application, your guarantor must: 

Have a strong credit history

A guarantor’s role is to reassure the lender that the loan will be repaid. If your guarantor has failed to pay off loans in the past or has excessive debt, the mortgage underwriter may reject them as a candidate, which could lead to your application being declined. A suitable guarantor will typically own their own home, have a reliable history of on-time payments, and maintain low levels of outstanding debt.

Have paid off a percentage of their mortgage

Some lenders require a guarantor to have cleared their own mortgage before they can support someone else’s, while some set a percentage that the guarantor must have paid, such as 25%, 50% or 70%. If they’re still paying their own mortgage, they’ll need to prove that they’re able to afford your repayments alongside their own. 

Be able to accept responsibility for debt

If you fall behind on payments, the guarantor becomes legally responsible for covering them. This is a major financial commitment, and it’s important that they agree willingly. If you can’t find a guarantor that is able to accept this responsibility, then buying a home with no deposit may not be a viable option for now.

2. Apply for a 100% mortgage

In rare cases, a first-time buyer may be able to buy a house with no deposit using a 100% mortgage. This newly launched product, often called Track Record Mortgages, allows eligible applicants to borrow the full cost of the property in exchange for higher interest rates. To get this type of mortgage – where there’s no need to put down a deposit – homebuyers typically need to show a strong track record or paying rent and bills on time, usually over the past 12 months or longer. 

How to find a 100% mortgage

Your mortgage advisor is the best person to ask about a 100% mortgage. As this product is still relatively new, not all brokers or lenders will offer it, and when they do, there may be strict eligibility criteria. It’s also important to take your broker’s advice; if they believe that the high interest rate could harm your long-term finances, you may want to explore alternative avenues to reduce your deposit instead. 

How will a 100% mortgage affect your repayments?

A higher interest rate means higher monthly repayments. Choosing a no-deposit mortgage increases the overall cost of borrowing and can extend the length of your repayment term too, as interest accrues on the outstanding balance each month. When combined with the full loan amount and the standard mortgage duration, interest can compound quickly, so it’s essential to understand how this will affect your budget before committing.

3. Use the Deposit Boost Scheme

You can increase your deposit without putting strain on your finances by using our Deposit Boost Scheme. When you buy with Bloor, we’ll contribute a percentage towards your deposit, helping you to strengthen your application and secure a better mortgage rate. If you’re looking at how to buy a new build house but you have no deposit, or you can’t afford the substantial payment, we’ll do what we can to make your move a reality. 

Buying A House with No Deposit

If saving the traditional deposit feels out of reach, there are other options available that will still get you on the property ladder. With the right professional advice and the support of schemes like our Deposit Boost, it may be more achievable than you realise. 

Once you’ve explored how to buy a house with no deposit, our Bloor team is here to help you find your new-build home and take your next step with confidence.