What is a 100% mortgage
A 100% mortgage is a way of borrowing the money you need to buy a home without paying a deposit.
A deposit is the money you pay towards your home before your mortgage starts.
Most lenders ask for a deposit that's at least 5% of the purchase price.
A small number offer 100% mortgages, which can be useful if you do not have a deposit.
Types of 100% mortgages
At the moment all 100% mortgages are guarantor mortgages. This means you’ll need the help of family or a friend to get one.
Someone can help you by offering their:
property as security
savings as security
A friend or family member can use their home as security against a percentage of your mortgage. The amount can vary between 20% to 25%.
It’s a big commitment as the lender can claim the shortfall from them if you do not pay your mortgage. The home would be repossessed and sold at a loss.
Your family member or friend puts some money into a savings account with the lender for a certain amount of time.
It’s often 3 years before they can take out their money and they might not earn any interest.
If your home is repossessed and sold at a loss, your helper may have to pay the difference.
Barclays offer a Family Springboard Mortgage. With this, your relative or friend puts 10% into a Helpful Start account for 5 years.
If you keep up with your repayments for 5 years, your helper gets their deposit back plus interest.
The mortgage then continues.¹
Family offset mortgages
With a family offset mortgage you pay less interest than with a family deposit mortgage.
You pay interest on the difference between the mortgage amount and the savings in your family member’s linked account.
Your family member will not earn interest on their savings.
The Yorkshire Building Society offers Offset Plus. This lets you link up to 3 family and friends’ savings accounts to your offset mortgage.
You can choose to either reduce your monthly payments or pay off your mortgage earlier.
Your family and friends can access their savings whenever they like.²
Family link mortgages
With the Post Office Family Link mortgage you borrow 90% of the purchase price as normal. You'll use the remaining 10% as a deposit secured against your helper’s home.
They must own their home outright.
Only your name is on the first mortgage and both your names are on the second mortgage.
For the first 5 years you make 2 separate repayments. You pay interest on your own mortgage but not on your helper’s mortgage.
After that, you make one repayment each month towards your mortgage.³
Can I get a 100% mortgage
You may be able to get a 100% no deposit mortgage if you have a family member or friend who’ll help you.
They’ll act as a guarantor for the loan, which means they’ll be liable if you don’t pay your mortgage.
Should I get a 100% mortgage?
A 100% no deposit mortgage could be an option if you’re not able to get a deposit.
not having as many products to choose from so not being able to get the best rate
making your family or friends liable if you do not pay your mortgage
a higher risk of falling into negative equity
Negative equity is when the value of your home is less than the size of your mortgage.
This can happen if house prices drop. Lots of people fell into negative equity during the global financial crisis.
You’re at a greater risk of going into negative equity if you have a 100% mortgage. Even a small drop in house prices could make the difference.
You might find yourself:
unable to switch mortgages to get a better rate
stuck on your lender’s standard variable rate and paying more than you should
unable to sell your home for a price that covers your mortgage
If you find yourself in negative equity speak to your broker or lender as soon as you can.
There are several things you may be able to do. You could make overpayments if you’ve got any savings but you’d have to check with your lender first.
Find out more about negative equity.
100% mortgages for first time buyers
There are other options if you're finding it hard to get a deposit but a 100% mortgage does not feel right to you.
learn how to save for a deposit
consider a first time buyer government scheme
Learn more in our first time buyer guide.
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¹ Barclays Family Springboard Mortgage
² Yorkshire Building Society Offset Plus for Borrowers
³ Post Office Family Link Mortgage
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