That’s according to chartered accountants, Lubbock Fine.
It said the total value of these 100% loan-to-value mortgages was £197 million in 2024.
What is a ‘zero deposit’ mortgage?
‘Zero deposit’ or 100% mortgages are mortgages where the value borrowed matches the value of the property being purchased. There is no deposit or downpayment from the home buyer.
The value borrowed under these 100% loan-to-value mortgages is typically capped at 4.5 times the applicant’s annual salary.
Lenders often require a guarantor – usually a family member – for the loan.
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Andy Noton, partner at Lubbock Fine, says demand for these products has grown steadily in recent years, driven by the cost-of-living crisis and rising house prices. He adds that the recent increase in ‘zero-deposit’ mortgages suggests more young and low-income buyers are relying on them to access homeownership.
Noton said: “Sluggish wage growth and high house prices have made zero deposit mortgages an attractive option for people looking to get on the property ladder.”
“Practically all these loans will be to first-time buyers who aren’t able to save large cash sums for traditional mortgage products and can’t rely on the Bank of Mum and Dad for a deposit.”
Are zero-deposit mortgages risky products?
Noton warns that zero-deposit mortgages can still carry risks for buyers. He explained: “They often have higher interest rates than traditional mortgages, which can make monthly repayments steep, even on lower value properties. These high rates also make it harder to build up equity in the property quickly. This, in turn, may make it difficult to remortgage if the Bank of England’s base rate comes down.
“Additionally, there’s a higher risk of borrowers falling into negative equity, where the value of the outstanding loan exceeds the value of the property. This may lower borrowers’ credit ratings and limit their access to loans in future.”