The struggle to save for a deposit is a barrier to thousands of first-time buyers – but some banks do still offer mortgages which require no deposit at all.
These used to be common but fell out of favour as regulations tightened following the financial crisis.
But last week one building society launched a brand new mortgage aimed at those with no deposits – and a leading high street bank will still allow customers to borrow their deposit, effectively allowing them to borrow 100% of the cost of their home.
The Market Harborough Building Society launched the 100% mortgage last week. It requires a parent to register a second charge against their own home and offers a variable rate, currently 3.99%.
Santander takes a different approach: it allows borrowers to use a personal loan as their mortgage deposit, effectively meaning that buyers can borrow 100% of the cost of the property.
They can also use it to “top up” their deposit – a method which could save a borrower money over the term of a loan.