Mortgage options for those with no deposit

July 3, 2017 by Brendan O'Neill

Lenders

Saving for a deposit can be incredibly difficult, especially if you have other financial commitments, such as rent to pay. However, it is possible to obtain a mortgage without having a deposit, although there is an element of risk involved. Speaking to a mortgage advisor will help you to decide the best course of action, as they have studied extensively on CeMAP courses.

Some lenders will consider a 100% mortgage, which means you can borrow the full amount of the house value without having to provide a deposit. Since the financial crisis ended in around 2009, this type of mortgage has been severely restricted, but is now available from some lenders but this can be rare. If you fall into negative equity, you could end up losing your home if you face financial difficulty.

A guarantor mortgage is also possible, where a third party acts as a guarantor. This means that they agree to be responsible for the debt, and if you fail to meet repayments, they will pay. A guarantor will be required until the amount you owe on a mortgage falls to around 80% of the property value, when you will become solely responsible. A guarantor is often a parent, but could be a friend or other family member.

As house prices continue to rise, parents are becoming more likely to help their children onto the property ladder. Recent research indicates that over £6.5 billion has been invested by parents this year. A family deposit mortgage lets parents who don’t have available cash help with a mortgage, by using some of their equity or use savings. For any mortgage without a deposit seek professional advice.