100% Mortgages – Your guide to zero deposit mortgages

First-time buyers can face many barriers getting on the property ladder, particularly the high deposit requirements by many mortgage lenders in today’s housing market. A 100% mortgage, also known as a zero deposit mortgage, offers a solution by enabling buyers to purchase a home without a deposit, borrowing the value of the home in full. This product addresses affordability challenges and offers new possibilities for those who dream of owning their first home.

Whether you want to buy a new build home, or invest in an older property, this article explains everything you need to know about 100 percent mortgages in the UK – from how they work, to their advantages and risks, plus some alternative schemes available to potential homeowners.

What is a 100 percent mortgage?

A 100% mortgage is a type of home loan that enables borrowers to finance the entire purchase price of a property without needing to save for a deposit. Unlike with a typical mortgage for which the buyer would need to put down a deposit of between 5% and 15% of the purchase price, the mortgage lender provides the amount in full.

So, how does it work? When you apply for a 100% mortgage in the UK, the lender assesses your financial situation, including your credit history and income, just like they would with a regular mortgage. If approved, you can borrow the entire amount needed to buy your home. Monthly repayments will generally be higher compared to mortgages with deposits, as you’re borrowing a larger sum.

With no deposit required, a 100% mortgage could be most suitable for hopeful first-time buyers with a steady income but limited savings, and renters who want to get onto the property ladder but are struggling to save for a deposit while making monthly rental payments.

Advantages of a 100 percent mortgage

Choosing a 100% mortgage comes with several advantages, including:

• No deposit required: Zero deposit mortgages could make homeownership accessible for potential buyers who have no substantial savings, but a consistent income.
• Easier entry into the housing market: Removing the barrier of a deposit means you could purchase your first home sooner, rather than waiting, in many cases years, to save for a deposit.
• More choice in properties: A 100% mortgage could help you to access broader, and better options in the housing market, and the ability to afford the home you really want – not settling for a less suitable home just to get on the property ladder.
• Flexibility in budgeting: With no deposit required, you can allocate funds to other expenses like moving costs or property renovations.

Risks and drawbacks

While 100% mortgages can be beneficial for first-time buyers, there are considerations that you should keep in mind:

• Higher monthly payments: Borrowing the entire purchase price of the property means your monthly mortgage repayments could be higher, impacting monthly budgets.
• Negative equity risk: If the value of the purchased property decreases, you could end up in ‘negative equity’, meaning you owe more to the lender than your home is worth – especially since you have no upfront equity from a deposit.
• Limited lender options: Fewer lenders offer 100% mortgage products, which could result in less favourable interest rates.
• Potential for higher interest rates: Lenders may charge higher mortgage interest rates to offset the increased risk of lending without a deposit.
• Stricter affordability checks: Due to the increased risk, lenders may impose stricter criteria on income and affordability for a zero deposit mortgage.

Eligibility criteria

Eligibility for a 100% mortgage can vary by lender and is subject to change due to a number of factors, but there are some common criteria that most will consider.

• Stable Income: A reliable income source is crucial to qualify for a zero deposit mortgage; lenders often prefer salaried employment or consistent freelance income.
• Credit score: A good credit history can enhance your chances of approval, although some lenders may be more lenient than others.
• Age: 100% mortgage applicants typically need to be at least 18 years old, though some lenders may have higher minimum age requirements.
• Property type: The specific property being purchased may affect eligibility, as lenders may choose to place restrictions on certain types of homes.
• Existing debts: Lenders will assess any existing debts alongside your income to ensure you are able to manage additional mortgage payments.

How to apply for a 100 percent mortgage

Applying for a 100% mortgage involves several steps, which generally include:

1. Research lenders: Identify lenders that offer 100% mortgages and compare their terms and rates, or speak to an independent mortgage advisor who can access the full market for you.
2. Gather financial documents: Prepare necessary documents, such as proof of income, bank statements, and credit history.
3. Get a decision in principle: Fill out the initial mortgage application form with the chosen lender, providing all the necessary information so that the lender can make a ‘decision in principle’ or ‘agreement in principle’ – an initial and non-binding confirmation of how much they are willing to lend you, which you can use as a guide when house hunting.
4. Make your formal mortgage application: Once you’ve found the property you want to buy, complete your full mortgage application with your lender, or your independent mortgage advisor if you are working with one.
5. Undergo credit checks: The lender will conduct formal credit checks and assess your financial situation.
6. Await the mortgage valuation: Your mortgage lender will carry out a valuation on the property that you want to buy to ensure that it is worth the amount that you are purchasing it for.
7. Receive an offer: If approved, you’ll receive a mortgage offer at this point outlining the terms and conditions. As long as you’re happy, you can finalise the mortgage and proceed to purchase the property.

Alternatives to a 100 percent mortgage

For first-time buyers who may not qualify for a 100% mortgage, or prefer to explore other options, there are several alternatives to consider. There are many affordable buying schemes designed exclusively for first-time buyers, as well as to help you buy a new build home – which is an appealing choice for those getting onto the property ladder, with no expensive renovations or redecorating required, a 10-year warranty and insurance protection, and energy efficiency built in so that you can enjoy lower utility bills from the day you move in.

• Deposit Unlock – The Deposit Unlock scheme enables buyers to access 95% mortgages on new-build homes, with lower deposit requirements.
• Track Record – Saving for a deposit while renting can be especially difficult, and innovative schemes such as the Track Record mortgage enables buyers to secure a mortgage based on their strong rental history.
• Own New Rate Reducer – Designed specifically for new build homes, the Own New Rate Reducer mortgage scheme can offer lower rates for those purchasing newly constructed homes.
• Help to Buy - Government-backed schemes, such as Help to Buy, assist first-time buyers in purchasing a new build home with a smaller deposit. This specific scheme has now ended in England, however Help to Buy – Wales continues until 31st March 2025, with the date of 19th December 2025 set as the final date for legal and practical completion.
• Gifted deposits – While not a formal scheme, family members can gift funds to help cover your mortgage deposit, making it easier for first-time buyers to enter the market. However, strict rules do apply; read our guide to using gifted deposits when applying for a mortgage to find out everything you need to know.

100% mortgages can offer a viable solution for many aspiring homeowners looking to enter the property market without the stress of saving for a deposit. While zero-deposit mortgages come with distinct advantages, it’s crucial to weigh these benefits against potential risks and costs involved. By understanding the eligibility criteria and application process, as well as exploring alternatives, you can make informed decisions about your home-buying journey.

If you are considering buying a new-build home with an award-winning housebuilder such as Bellway, your sales advisor can put you in touch with recommended independent mortgage advisors to support you. They can provide qualified expert guidance tailored to your specific needs, ensuring you find the best mortgage solution for your financial situation.

For further information, visit Bellway’s first-time buyer hub, or begin your search for your dream new build home today.