A mortgage with no deposit? Is that possible?

Look into Guarantor Loans

One reason why banks will shy away from mortgages with no or low deposits is because the underlying borrowers typically do not have a very sizable income or a lot of assets.  You can help to alleviate this risk if you are able to get a guarantor for your mortgage loan. If you have a family member or close friend that has a strong source of income, verified personal liquidity, and a good credit score, their signature on the mortgage documents could go a long way as they will be committing to making the loan payments if you fall behind. In many situations, the guarantee provided by this individual could be enough to have your loan approved.

When you get a guarantor loan, the guarantor will have several options for securing the loan. One common option is for the guarantor to post their other property and home equity as collateral. Another option would be for the guarantor to put a certain amount of personal savings into an account that could then be used to secure the loan. If you were to default on your loan and the guarantor does not keep up the payments, the bank would likely go after the additional collateral as well.

Builder or Developer Loans

If you do not have the full 20% down payment that most banks want, you can also consider bridging the gap with a loan provided by the builder of the property. If you have bought a new home from a prominent developer, they may have a financing department that could help you out. A property developer may be willing to provide you with a loan for your full down payment amount, but you may need to repay it on a faster schedule.

Help to Buy

The government Help to Buy program is very popular as it can help greatly in reducing the amount of money you need for a deposit. With this loan program, you can borrow up to 20% of the property value. Best of all, this loan comes with no interest for up to five years, at which point it is expected the loan will be repaid. The expectation is that you would then contribute an additional 5% towards the purchase. While this is not necessarily a zero deposit loan, it significantly reduces the money you need to purchase your home and increases the options for first time buyers.

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