The deposit burden has made it difficult for renters to become homeowners. With the escalating house prices and living costs, tenants struggle to pay rent, cover expenses and accumulate savings. The question of how to get a mortgage with no deposit will interest renters.
A solution to this problem came from a lender recently launching the revolutionary Track Record mortgage, which examines renters’ rental payment history. As a result, they can obtain a mortgage without a deposit if they meet their affordability criteria. More on this later in the article.
What are your options if you can’t afford a mortgage?
Many people can afford a mortgage, even if you think you can’t. Homeownership is not just a checklist; numerous strategies can make it affordable. Unfortunately, misconceptions abound regarding the expenses involved in buying homes. If you have already begun the process, you may have contacted the wrong lenders. The good news is, this isn’t the end of the road.
Aside from how to get a mortgage with no deposit, here are some areas to explore further if you think you can’t afford a mortgage.
Higher-income multiples
If you’re worried that your salary won’t be enough to get a mortgage, don’t worry. Most lenders use an average income multiple of around 4 to 4.5x your salary, but some lenders can offer higher multiples. For example, you can get a mortgage that’s 5x subject to meeting specific criteria. If you are going to apply for a joint mortgage, lenders may use a different multiple, such as 3.5 to 4.
Government schemes
The UK government offers helpful schemes that can aid in buying a home, particularly for individuals with difficulties saving for a deposit. Examples of such schemes include:
- Shared Ownership
- Right to Buy
- Right to Acquire
- Mortgage guarantee scheme
Family mortgage options
You can receive help and assistance from your family, relatives, or friends, some widely chosen alternatives.
- Guarantor mortgages
- Joint mortgages
- Offset mortgages
- Joint borrower sole proprietor (JBSP) mortgages
How to get a mortgage with no deposit?
As the saying goes, we save the best for last; a 100% mortgage, also known as a zero deposit or no deposit mortgage, is a home loan where the lender provides the total amount required to purchase a property without the borrower needing to put down a deposit. In other words, the lender finances the entire cost of the property, and the borrower doesn’t need any upfront cash.
In the past, some financial institutions offered 100% mortgages, particularly during periods of economic growth or when the housing market was booming. However, after the global financial crisis 2008, many lenders became more cautious and tightened their lending criteria. As a result, 100% mortgages became obsolete, and lenders typically required borrowers to provide a deposit to mitigate the risk.
The main reason for lenders’ caution is that offering 100% mortgages can be risky. If property prices decline, borrowers could end up in a negative equity situation, where the value of their property is lower than the outstanding mortgage balance. This makes it challenging to sell the property or refinance the loan, potentially leading to financial difficulties for the borrower and losses for the lender. 
While it’s uncommon to find any lender offering a 100% mortgage, we have one willing to do that for first-time buyers currently renting and subject to meeting other key eligibility criteria. So, contact us today to see how we can place borrowers with only minimal options for a mortgage with less than a 5% deposit or `No Deposit` without help from friends and family. In conclusion, Connect Mortgages can show you how to get a mortgage with no deposit.
Please note that this product has limited availability and may be withdrawn at any time without notice.
