100% mortgages

What do you do if you could afford a mortgage but don't have any savings? As a would-be homeowner you may be wondering if you qualify for a 100% mortgage.

Compare low-deposit mortgages*

Unfortunately, 100% mortgage deals have almost entirely vanished and it doesn't look like they're coming back any time soon.

But you can compare mortgages with low deposits through Gocompare.com, or chat to an adviser to find out how affordable a mortgage might be.

It may not be possible to find a 100% mortgage, but you might qualify for a 95% deal, subject to your personal circumstances.

Aren't houses much cheaper now?

House prices have fallen from their peak before the credit crunch, but lenders have become even more cautious about how much they will lend and who they're happy to lend to.

That means it's still really difficult for first-time buyers to find a mortgage, let alone a 100% deal.

If you want to buy a house, your best bet is to save up a deposit. Remember, the bigger your deposit, the more likely you are to qualify for the best deals.

What if someone helps me?

Some lenders are willing to offer 100% mortgages if a parent, step-parent or grandparent is willing to stand guarantor and secure the loan against their own home.

However, most mortgage providers aren't offering any kind of 100% mortgage, so you wouldn't have much choice and could end up paying a higher rate.

If you can save at least 5% as a deposit, you'll have access to a much wider range of mortgages - take a look on the mortgage comparison page.

Remember, if someone agrees to stand as guarantor for your mortgage, they will be pursued for the money if you find yourself in difficulties.

If you are lucky enough to have a relative willing to give you a hand then maybe they could help you save a deposit.

What if I'm trapped in negative equity?

Perhaps you want a 100% mortgage because you already own a home and it's fallen into negative equity.

Some lenders have been willing to lend more than 100% for existing customers who want to move house and remortgage but are in negative equity. However, most are unwilling to take that kind of risk.

If you're trapped in your home then you could ask your lender for consent to lease, letting you rent out your property and move on. This would be subject to terms and conditions. 

Where can I get a deposit?

If you're struggling to save a deposit but you're confident you could afford mortgage payments, it can be really frustrating.

Perhaps you're lucky enough to have family who could lend you the funds, or maybe you could buy with a friend so you only need to save a smaller amount.

There are also schemes to help you buy a home with a small deposit. Under the government's FirstBuy scheme for people in England, you only need to raise 5% as a deposit, with the homebuilder and government providing an equity loan for 20%.*** That allows you to access a more competitive rate with a small deposit.

Terms and conditions apply so it's important you understand how the scheme works, and make sure you check what schemes are available if you are in Scotland, Wales or Northern Ireland. 

Check out our page on first-time buyers for more information.

Fixed or variable rate?

If you've decided to apply for a low-deposit mortgage, you'll need to decide whether to fix your rate for between two and five years, or to apply for a variable-rate mortgage.

Fixing gives you the security of knowing exactly how much your mortgage will cost each month, which can make it easier to budget for.

However, a variable rate may be cheaper for the time being - remember this could increase or decrease in the future.

Talk to an expert mortgage adviser about the options so that you can make the right decision for your circumstances.

You can speak to an L&C adviser for free advice by calling 0844 409 9724**

By Felicity Hannah