There are now several 100% mortgages available to choose if you don’t have a deposit. First-time buyers are sure to welcome the news, but before you opt for a mortgage with zero deposit, there are pros and cons to weigh up.
A 100% mortgage means you’re able to borrow the full value of the property you want to buy through a mortgage – you don’t need a deposit to secure the loan. With many aspiring homeowners struggling to save a deposit as rent and other expenses soar, 100% mortgages could provide a useful way to buy your first home.
While you don’t need a deposit to secure a 100% mortgage, you’ll typically still need some savings to purchase property. For example, you may need a budget to cover solicitor fees, a survey, buying furniture, and more.
So, if a 100% mortgage sounds like it could be a great option for you, here are some of the pros and cons that are important to consider.
3 advantages of a 100% mortgage
You don’t need to save a deposit
The key advantage to a 100% mortgage is that you don’t need to save a deposit.
According to data from Halifax released in February 2025, the average first-time buyer has a deposit of £61,090. That figure can seem daunting if you’re starting from scratch, so being able to purchase a home without the need for a deposit could be a weight off your mind.
You could get on the property ladder sooner
The challenge of saving a deposit means the average age of first-time buyers is rising. Indeed, the Halifax research suggests that the average age of someone buying their first home is 33 – the highest it’s been in two decades.
Getting on the property ladder sooner could improve your finances. In some cases, mortgage repayments may be lower than rent. In addition, by getting on the property ladder at a younger age, you have a chance to be mortgage-free sooner, so it could improve your long-term finances too.
You could maintain your savings
Even if you have a sizeable deposit saved, there could be benefits to opting for a 100% mortgage.
Maintaining your savings could provide you with a safety net that improves your financial resilience. Alternatively, it could be used as a fund to renovate or decorate your new home.
3 disadvantages of a 100% mortgage
You’re likely to pay a higher interest rate
Typically, lenders offer their most competitive interest rate to homeowners with more equity in their home. With a 100% mortgage, you wouldn’t hold any equity, so you should expect to pay a higher interest rate.
The interest rate affects your mortgage repayments and the overall cost of borrowing. So, take some time to assess if you could afford the repayments and how much more they would be. In some cases, taking some extra time to save even a small deposit could be worthwhile.
You’d be at greater risk of falling into negative equity
As you won’t hold any equity in the property initially, you’d be at greater risk of falling into negative equity. This is where the value of your home is less than the outstanding mortgage balance, which may happen if property prices fall.
Negative equity could make it more difficult to secure a mortgage when your current deal runs out, and present challenges if you want to move home.
Historically, property prices have increased over the long term and recovered from dips. So, often simply waiting for the market to recover while meeting your mortgage repayments will pull you out of negative equity, but property prices cannot be guaranteed.
There are fewer 100% mortgage options
Compared to the mortgage options you’d have if you had a deposit, you’ll have fewer lenders to choose from by opting for a 100% mortgage. Less choice could lead to you paying a higher interest rate and mean this option might not be suitable if your credit score is poor or you may benefit from approaching a specialist lender.
We could help first-time buyers secure a mortgage
Deciding if a 100% mortgage is right for you is just the start of securing the money you need to buy a home. You may also need to weigh up other mortgage options, like whether to choose a fixed- or variable-rate mortgage, and, of course, assess which lenders are likely to approve your application.
As a mortgage broker, we could offer guidance throughout the mortgage application process and potentially save you money by helping you secure a lower interest rate. Please get in touch if you’d like to talk to one of our team.
Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
