Credit Score Basics > Now you can get a 100% mortgage. Should you?

Now you can get a 100% mortgage. Should you?

Wollit Team3 minute read · Updated 1st July 2024

A 100% mortgage is a mortgage deal that doesn’t ask you to put down any deposit at all. In other words, the deposit is 0%.

If you’re looking to get a mortgage with no deposit at all, this can sound like a great deal. However, 100% mortgages are quite rare. In fact, only one mortgage lender is currently offering one.

Here is what the deal looks like:

In May 2023, Skipton Building Society launched a new 100% mortgage product called the “Track Record Mortgage”, aimed at helping renters get on the property ladder without a deposit. This is the first 100% mortgage in the UK since the financial crisis.
With a 100% mortgage, you can borrow the total value of the property, so no deposit is required. However, you will still need to cover other fees like solicitor costs, searches, surveys, and moving expenses.
To be eligible for Skipton’s 100% mortgage, you must be a first-time buyer or a previous homeowner who has not owned a home in the last three years.
You must show at least 12 months of on-time rent payments, have a good credit history, and be over 21 years old.
100% mortgages are riskier for lenders, so they usually have higher interest rates. Skipton’s 100% mortgage has a 5-year fixed rate of 6.19%, compared to 5.49% for their 95% LTV mortgage.
A 100% mortgage is also risky, especially if house prices fall—you’ll be stuck paying for a loan larger than your home's price.

Are there any other mortgage providers who offer 100% mortgages?

As far as we know, no other lenders are offering 100% mortgages right now. You’ll have to see if you’re eligible for the one provided by the Skipton Building Society.

Otherwise, you can save up for a while and see if you qualify for a 95% mortgage—there are many more options here, including from large lenders such as Barclays or Halifax.

What are the pros and cons of a 100% mortgage?

The main benefit of getting a 100% mortgage in the UK is that it allows you to buy a home without needing to save up a deposit. This can be particularly helpful for first-time buyers struggling to save for a deposit due to high rents and rising house prices.

Some other potential benefits include:

Getting on the property ladder sooner rather than waiting years to save a deposit.
Avoiding the need to borrow money from family or friends for a deposit.
Potentially building wealth through homeownership rather than renting.

However, it’s essential to carefully consider the risks and drawbacks of 100% mortgages as well:

Higher interest rates compared to mortgages with a deposit. This means you may end up paying more in interest over the life of the loan.
Increased risk of falling into negative equity if house prices fall. Negative equity is when the value of your property decreases, leaving you owing more on your mortgage than the property is worth. This can be a significant issue, especially if house prices decline.
Less choice of lenders and mortgage deals – literally just one lender. This means you can’t shop around for the best rates and terms.
Committing to a large debt without the flexibility a deposit provides. This can limit your flexibility in the future if you need to sell the property or face financial difficulties.
There is also the risk that you may overstretch yourself financially, especially if unexpected expenses arise or interest rates increase.

To see more (and potentially better) mortgage options, consider investing in your credit score. A good credit score can significantly benefit you when getting a mortgage in the UK.

Here’s how:

A good credit score shows lenders that you are a responsible borrower and more likely to repay the debt. This increases your chances of being approved for a mortgage.
With a good credit score, you are more likely to qualify for lower interest rates on your mortgage. This can result in significant savings over the life of the loan, reducing your monthly payments and the total amount of interest paid.
Lenders may offer you a wider range of mortgage products and better terms if you have a good credit score. This can include lower fees, longer repayment periods, and higher LTV ratios.
A good credit score even gives you leverage to negotiate with lenders for better rates and terms. It puts you in a stronger position to secure a mortgage on the terms you want.

To improve your credit score, consider downloading a credit-building app like Wollit.

Wollit works by reporting your fixed fee monthly subscription as a loan repayment to credit reference agencies (Experian, Equifax, and TransUnion).

This helps you improve your credit history by showing that you can repay debt on time, one of the main factors that influences your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian, giving you an opportunity to show lenders that you’re responsible. In fact, lenders like Skipton specifically want to see that you’ve been paying rent on time. So not only would Wollit help you expedite your application for a 100% mortgage, but it could also help you become eligible for better mortgages in the future.