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B-Advised Blog

How to get a mortgage with no deposit


As of May 2023, building societies across the country have introduced various schemes that allow first-time homebuyers to secure property more easily than in previous years and aligns with the spending criteria of modern customers. 

These opportunities come in many forms, one example being the Leeds Building Society introducing a measuring method that assesses the use of Netflix subscriptions and other regular payments as proof of credit for those living at home. The Skipton Building Society was in the headlines this month, for introducing a user-friendly 0% deposit fund that assesses an individual’s payment of rent across 12 months to issue a five-year mortgage plan. 

With mortgages becoming more flexible and aligning with the modern way people are spending and saving their money, it’s time for potential buyers to fully understand what different mortgage options can provide them and how to use financial information to strengthen their case in securing their dream homes.

How zero deposit mortgages work for you

In simplistic terms, the zero-deposit mortgage is a mortgage application that does not require the purchasing party to have any savings as a down payment. In most cases, the lender pays the entirety of the deposit and fees related to the purchasing of the house, leaving the buyer to upkeep the mortgage and return payments once they own the property. 

To secure this type of support, prospective buyers must provide evidence that illustrates that they will be able to make payments for the property – typically, this evidence includes previous rent payments, bank account details, and income. 

Furthermore, applicants must have a clean history of credit to secure this kind of support from lenders. This can be difficult for buyers that are still living at home or do not possess a credit card, which is why forward-thinking building societies have begun to include payments such as streaming services and phone bills to be entered as evidence for credit checks.

Types of zero deposit mortgages

These types of mortgage deposits were a popular and easy way to purchase a home before the market crash in 2008, and with their modern resurgence comes the reintroduction of how to secure a property without a deposit.

Guarantor property support: This is the most common type of 0% deposit. It relies on family or other relatives to support the prospective home buyer by subsidising their own home as collateral. In this instance, the value of the guarantor’s equity must be at least 25% of the prospective home and their own home. 

This scheme works best for those with guarantors that own property and are no longer paying a mortgage, this is because more equity can be released from the home that can be used to support prospective home buyers.

Guarantor financial support: For those guarantors with high-valued savings, it is better to pay a small amount (5-10%) of the deposit upfront to support the prospective home buyer in securing a property. Saving accounts that offer interest can also play a role in paying the interest generated by mortgaging the home, assuring the security of the property for several years. 

Lender approval: Inspired by the Skipton Building Society’s latest scheme, this type of deposit relies on your lenders acting similarly to a guarantor. Of course, the buyer still has to go through credit checks and financial reviews before the lender can offer the service. However, once this has been assessed, buyers will be offered a fixed-rate mortgage, assuring them that the prices will not go up once they have secured the property.

The risks of a zero deposit mortgage

Like most financial obligations, there is always an element of risk, and, while working with a mortgage or financial advisor can limit these issues, they cannot eradicate them. 

With these types of deposits, there is a heavy reliance on a guarantor which can cause financial issues for them, and personal issues if they’re a friend or family member. Likewise, the affordability is determined by the guarantor’s finances, which can cause disparity towards what the homeowner can afford on their own home.

Another issue with these deposits is the large amount of interest that relates to most cases. The Skipton Building Society scheme, for example, offers the loan at a 5.49% interest return. As such, the cost of the mortgage is going to increase more substantially than a typical deposit-based mortgage during the overall payment of the property.

How we can help

Purchasing a property is a large commitment for anyone, whether you’re a first-time home buyer or a frequent house mover, the process is the same and the expenditure can be the first hurdle to get over. 

B-advised is a financial advisory firm in the North East that has supported customers in property purchasing for over 30 years and continues to make waves when it comes to this sector. We work closely with our customers to ensure that the packages we offer are right for them and that they receive the best support for securing their future homes.

If you’re ready to get onto the property ladder and need more information on deposits, get in touch with our team today!