No deposit mortgages aka 100% mortgages, have been an elusive breed of mortgage to find of late.  With the banks lending criteria being extremely tough, finding a financial provider of no deposit mortgages have become much harder.

The principle and attraction of a no deposit mortgage is simple.  Most mortgage companies or arrangers would require a deposit – as a form of security and commitment from you – a down payment on the house or property that you wish to buy.  This means they lend you a lower amount – say 90k and you put up the deposit of 10k, should the property cost 100k total.

Obviously on the amount you borrow for the mortgage, the 90k, you will also accrue and pay interest charges as well as the mortgage repayments each month.

With no deposit mortgages, the bank will cover the full 100k needed for the property purchase. So you do not need the initial deposit in order to buy your first mortgage.  This is beneficial to many first time buyers who may be on a low income and unable to raise or save enough cash for their first time buyer mortgage, so having the no deposit or zero down mortgage gives them a good opportunity.

Mortgage providers are not too keen on this type of mortgage right now, although they may become more available in the future again.  There is a mortgage company which will provide 100% mortgage with a guarantor for a 25% deposit, which helps lessen the financial risk of lending no deposit mortgages.