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About 100% LTV Mortgages
You won’t need a deposit, but you will need a guarantor for a 100% LTV mortgage. Just choose your type of borrowing above, answer a few quick questions and you’ll be matched with 100% LTV mortgages across lenders.
Think carefully about securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
What is a 100% mortgage?
A 100% mortgage covers the full purchase price of a new home, allowing you to buy a property without using a deposit.
For this reason, 100% mortgages are also referred to as guarantor mortgages, 0% deposit mortgages or even 100% LTV (loan-to-value) mortgages.
How 100% mortgages work
A 100% mortgage works in much the same way as any other type of repayment mortgage, so you’ll have to make monthly repayments, with interest, for the duration of your mortgage term. Lenders tend to charge higher interest rates for 100% mortgages than traditional mortgages because there is a higher risk they could lose money if you’re unable to pay off your mortgage.
Lenders will also require you to have a guarantor, who will generally be a close family member, or sometimes a friend, for you to stand a chance of getting a 100% LTV mortgage.
Types of 100% mortgages
Currently, most lenders that currently provide 100% mortgages require borrowers to have a guarantor. This is to give them some security that someone is ready and able to step in should you fail to make your payments. Almost anyone can be a guarantor, including parents, close relatives or friends, though lenders do sometimes require your guarantor be close family.
A guarantor mortgage can be set up in a few different ways. Some lenders require that a guarantor allows a charge to be secured against their home to provide security against a proportion of your mortgage. Often referred to as using property as security, the charge typically covers between 5% and 20% of the purchase price of the home you are buying.
While a guarantor won’t own a share in your home, they will agree to make the mortgage repayments on it if you can’t. But perhaps even more importantly, if neither you nor your guarantor can pay what you should, and your home is repossessed, a lender could order the repossession of your guarantor’s home if there is a shortfall between the mortgage you still owe and how much your home is sold for.
Family deposit mortgages
Some guarantor mortgages allow a guarantor to put up savings as security rather than their home. These are known as family deposit mortgages.
Lenders may ask guarantors to make a deposit of up to 25% of the value of the home being purchased into a savings account to secure a family deposit mortgage. These savings must then remain in place for a certain number of years, or until a predetermined percentage of the mortgage is paid off.
Your guarantor will get all of their money back along with interest if you pay off your mortgage on time. However, if repayments are missed the lender may hold on to the money longer. Or if you default on your mortgage and the repossession and sale of your home don’t cover the outstanding loan, your lender may use the money in the savings account to pay it off.
Family offset mortgages
A family offset mortgage is when the total amount of your loan is reduced by the value of your guarantor’s savings. It’s similar to a family deposit mortgage except your guarantor won’t earn interest on their savings pot.
There are two types of offset mortgages:
- Reduced monthly repayment: You can use the savings to reduce the amount of interest you pay each month, making your repayments cheaper.
- Reduced mortgage term: You can use the savings to reduce the duration of your mortgage, which can also reduce the amount of interest you’re charged.
Can you get a 100% mortgage?
These days, 100% mortgages can only be achieved with a guarantor.
However, this wasn’t always the case. In the run-up to the 2008 financial crisis, it was much more common for lenders to offer no deposit mortgages or loan more money than the property was worth. However, these loans left a lot of people with mortgages they couldn’t afford. New rules, introduced by the Financial Conduct Authority (FCA), meant that lenders had to take more steps to make sure that borrowers could afford a mortgage before they approved a loan
Although some options have gradually returned, since the pandemic lenders have reined in lending to those considered riskier borrowers, leading to some providers suspending their no deposit mortgage products.
Can I get a 100% LTV mortgage?
Lenders can make 100% mortgages available to first-time buyers, those moving home and for remortgaging.
However, due to the extra risk a lender takes on if there is no deposit, you will only be able to get a 100% mortgage if you have a guarantor, who can offer additional security in case you are unable to make repayments, or if you’re an existing customer who wants to remortgage.
And even with a guarantor in place, a lender could still turn you down for a 100% LTV mortgage. To reach a decision, a lender will assess your eligibility and try to work out how much mortgage you can afford.
Most lenders will also take your credit history into account. Having bad credit, or no credit history at all, can make it harder to get approved for a mortgage with no deposit. Taking steps to improve your credit score could boost your chances of being approved for a home loan.
Who offers 100% mortgages?
With most lenders still reluctant to take on the risk that no deposit mortgages pose, there are only a handful of providers that currently offer 100% mortgages. To find out who is offering them, you can look at our mortgage comparison tool above or you could consult a mortgage broker, who may be able to access deals that are not offered direct to consumers.
Benefits and advantages of a 100% mortgage
- No deposit needed: provides the chance to buy a home without having to save up a deposit.
- Family help: could be an alternative to a gifted deposit if a family member wants to help a loved one on to the property ladder.
Risks and disadvantages of a 100% mortgage
- Guarantor: you’ll need to find a guarantor (almost certainly with a decent credit score) to support you, who is willing to put their property at risk.
- Negative equity: if house prices fall and the value of your home decreases, you could be forced into negative equity where what you owe on your mortgage is more than what your property is worth. This can make it very difficult to remortgage or to move home, and could see you tied into making repayments on a property that is falling in value.
- Limited deals: the pool of available 100% mortgages is very small.
- High interest: 100% mortgages are likely to be more expensive than a standard mortgage.
100% LTV Mortgages FAQs
Can you get a mortgage offer without a deposit?
Yes, some lenders offer mortgages with no deposit. These are known as no deposit mortgages, guarantor mortgages, 100% mortgages or 100% LTV mortgages.
Lenders ask for a guarantor before you can secure a 100% mortgage. You’ll also usually have to pay higher rates of interest because there is a greater risk that the lender will lose money if you can’t repay the loan.
How do you get a 100% mortgage?
Once you have a guarantor, you’ll need to decide what type of no deposit mortgage you want to apply for. You can apply for a 100% mortgage over the phone or in person at a local branch.
What does LTV mean?
LTV is short for loan to value and is a term used to indicate the size of the mortgage you want to borrow in relation to the value of the home you wish to buy. So if you don’t have a deposit and want to borrow the entire value of the property, you’ll be looking for a 100% LTV mortgage.
» MORE: What LTV means for a mortgage
What is a guarantor?
A guarantor is someone willing to support your application for a mortgage or loan, who will step in and make your repayments if you cannot.
Having a guarantor may be essential if you want a 100% LTV mortgage. Typically, they will also be a close relative or sometimes a friend. They will need to be at least 21 years old and have a good credit history to stand the best chance of helping your application. The maximum age tends to vary between lenders.
What to do if you can't get a 100% mortgage?
If you can’t get a 100% mortgage, or decide it isn’t a good choice for you, saving a deposit can widen your mortgage options considerably. A deposit of a few thousand pounds may open the path to getting a 95% LTV mortgage.
If your family isn't able to be a guarantor, but still wants to help you out, it may be worth considering if they can offer a gifted deposit.
Where lenders are rejecting you because of poor credit, there may be some ways that you can improve your credit score.
Are there low-deposit alternatives to 100% LTV mortgages?
How can I save a deposit?
These simple tips could help you save up for a deposit quickly:
- Boost your savings: Take advantage of the best savings deals and use government-backed schemes such as the Lifetime ISA to give your savings a boost.
- Reduce your rent: Where possible, reducing expenses such as your rent payments – by moving to a cheaper area or back home, for example – could help you save up your lump sum faster.
- Cut spending: Create a realistic budget to help you reduce your outgoings and put more money towards your housing deposit.
Is my credit record important for 100% LTV mortgages?
As with any mortgage application, your credit record will be important as lenders use it to assess whether you’re likely to keep up with the repayments on a loan. The credit history of your guarantor is likely to be just as important to lenders too.
Can I get a first-time buyer mortgage with no deposit?
Yes, it is possible to get a first-time buyer mortgage with no deposit. Some lenders offer 100% mortgages which means that they will loan you the total purchase price of a property without you having to put down a deposit, but only with a guarantor.
Can I get a no deposit mortgage with bad credit?
It can be difficult to get a no deposit mortgage with bad credit, but it’s not impossible. Lenders will also consider your income, the size of the mortgage and whether you’ll be able to afford repayments when deciding to approve your application. It’s always worth taking steps to improve your credit score before applying for a mortgage as it could help to boost your chances of being approved.
Can I get a 100% LTV buy-to-let mortgage?
No, a buy-to-let mortgage will always require a deposit. Most lenders will request a minimum deposit of 25% on a property that will not be used as your primary residence.
Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more
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