Getting a mortgage without a deposit can be difficult, particularly if your credit history includes defaults, CCJs, missed payments or other adverse information. Most lenders require applicants to contribute a deposit, and credit problems may further reduce the number of available options.
That does not necessarily mean home ownership is impossible. Your circumstances, the source of any financial support, your income, affordability and the nature of your credit history will all influence what may be available.
Mortgage Bridge acts solely as a mortgage introducer. We do not provide regulated mortgage advice, recommend mortgage products or lenders, assess your eligibility, or guarantee that an application will be accepted.
Can you get a mortgage with no deposit and bad credit?
A genuine no-deposit mortgage allows you to borrow the full purchase price of a property. These arrangements are uncommon and generally subject to restrictive eligibility and affordability requirements.
Having adverse credit can make the situation more complicated because a lender may view both the absence of a deposit and the credit history as additional risks. Some applicants may therefore need to consider a deposit or an alternative form of support before an application becomes realistic.
The outcome will depend on factors such as:
- The type of credit issue recorded
- How recently the issue occurred
- The amount involved
- Whether outstanding debts have been settled
- Your payment history since the issue occurred
- Your income and overall affordability
- Your existing credit commitments
- The proposed property and purchase price
- Whether family assistance may be available
Why is a deposit normally required?
A deposit reduces the percentage of the property’s value that must be borrowed. This is known as the loan-to-value ratio, or LTV.
For example, if a property costs £200,000 and you contribute a £20,000 deposit, the mortgage required would be £180,000. This represents a 90% LTV mortgage.
A lower LTV generally provides the lender with more protection if the property has to be sold in the future. It may also give the applicant access to a broader range of mortgage options, although acceptance is never guaranteed.
How lenders may assess adverse credit
Lenders do not all treat adverse credit in the same way. An application is normally assessed using the lender’s individual criteria and the applicant’s complete financial circumstances.
How recent the credit issue is
Recent missed payments, defaults or CCJs may be treated more seriously than older issues, particularly where the underlying problem appears to be continuing.
The type and amount of the issue
A lender may distinguish between an isolated communications default and a larger default on a loan or other financial agreement. The amount involved and the type of account can both be relevant.
Whether the debt has been settled
Some lenders may prefer adverse debts to have been settled before an application. Others may consider unsettled issues in certain circumstances, but the available options could be more limited.
Your recent financial conduct
Lenders may review your recent credit commitments and bank statements to understand how you currently manage your finances. Continued missed payments, persistent unauthorised overdraft use or returned payments may affect an application.
Your income and affordability
The mortgage must remain affordable after accounting for household expenditure, credit commitments and possible changes in interest rates. A lender will carry out its own affordability assessment.
Could a gifted deposit help?
A gifted deposit is money given to the buyer, commonly by a close family member, without an expectation that it will be repaid.
Some lenders accept gifted deposits, subject to their individual rules. The person providing the gift may need to confirm:
- Where the money has come from
- That it is a genuine gift rather than a loan
- That they will not acquire an interest in the property
- That repayment will not be required
Solicitors and lenders must also complete relevant identity, source-of-funds and anti-money-laundering checks.
What about family-assisted mortgages?
Some mortgage arrangements allow family members to provide support without giving the applicant a conventional cash deposit. Depending on the product, this might involve savings being held as security or a charge being placed against another property.
These arrangements can create financial and legal risks for the supporting family member. Independent legal advice may be required, and everyone involved should understand what could happen if the mortgage payments are not maintained.
Family assistance does not automatically overcome adverse credit. The applicant will still be subject to the lender’s eligibility, credit and affordability checks.
Can a guarantor help?
A guarantor or supporting borrower may strengthen some applications, but this does not guarantee acceptance. The supporting person may become legally responsible for the mortgage payments if the borrower cannot pay.
The lender will usually assess the supporting person’s income, commitments, age and credit history as well as those of the applicant. Appropriate legal advice should be obtained before entering this type of arrangement.
Could shared ownership be an option?
Shared ownership allows an eligible buyer to purchase a share of a property and normally pay rent on the remaining share. Because the mortgage is based on the share being purchased, the required mortgage amount may be lower than it would be for an outright purchase.
A deposit is commonly still required and adverse credit will remain relevant. Eligibility rules, affordability assessments and housing-provider requirements will also apply.
Would saving a deposit improve your options?
In many circumstances, building a deposit may make an application more achievable. A larger deposit can reduce the required mortgage and may give a lender more protection.
It may also provide time to demonstrate improved financial conduct following previous credit problems. However, the effect will depend on the applicant’s circumstances and the lender’s criteria at the time of application.
Steps that may strengthen your position
Before applying, it may be helpful to:
- Review your credit reports with the main credit-reference agencies
- Check that the information recorded is accurate
- Register on the electoral roll where appropriate
- Bring outstanding accounts up to date where possible
- Avoid taking unnecessary new credit
- Reduce unsecured borrowing where affordable
- Maintain sufficient funds for legal, valuation and moving costs
- Keep evidence showing the source of any deposit
- Prepare recent income and bank-statement documents
Do not settle debts or rearrange your finances solely to obtain a mortgage without first considering the wider consequences. Where necessary, seek appropriate professional advice.
Costs beyond the deposit
Even if a mortgage is available with little or no conventional deposit, purchasing a property can involve additional expenses. These may include:
- Solicitors’ fees
- Valuation or survey costs
- Mortgage product or arrangement fees
- Broker fees, where applicable
- Property taxes where applicable
- Removal and insurance costs
- Initial repairs, furnishings and maintenance
These costs should be included when deciding whether the purchase is affordable.
Risks of borrowing without a deposit
Borrowing a high proportion of a property’s value may increase the risk of negative equity. This can happen if the property’s value falls and the outstanding mortgage becomes greater than the value of the home.
A high-LTV mortgage may also offer fewer product choices or involve higher costs than lower-LTV borrowing. Moving or remortgaging could be more difficult if the property value falls or your circumstances change.
How Mortgage Bridge supports you
Mortgage Bridge provides general information to help you understand the factors that may affect a mortgage application involving a small deposit, no deposit or adverse credit.
Where appropriate, we can introduce you to an FCA-regulated mortgage adviser who can review your complete circumstances, assess affordability and provide regulated advice.
When it may be worth speaking to an adviser
You may benefit from regulated mortgage advice if:
- You have no conventional deposit available
- A family member may be able to provide financial support
- You have defaults, CCJs or recent missed payments
- You are considering a guarantor or family-assisted arrangement
- You are unsure how much deposit you may need
- Your income or employment circumstances are complex
- You have previously had a mortgage application declined
Common questions
Are 100% mortgages available?
A limited number of products may allow eligible applicants to borrow the full purchase price. Availability and criteria can change, and adverse credit may significantly restrict the available options.
Can I borrow the deposit separately?
Some lenders may accept a deposit funded through borrowing, while others will not. The additional repayment will be included in the affordability assessment and could reduce the amount you are able to borrow.
Can my parents provide the deposit?
Many lenders accept gifted deposits from close family members, subject to evidence and the lender’s individual requirements.
Will a guarantor overcome my bad credit?
Not necessarily. A guarantor may support some applications, but the applicant’s credit history, affordability and overall circumstances will still be assessed.
Will a larger deposit help if I have adverse credit?
It may improve the range of options available, but it does not guarantee acceptance. The nature and recency of the credit issues will remain relevant.
Next steps
If you have adverse credit and little or no deposit, it can be helpful to understand your position before submitting a mortgage application. An FCA-regulated mortgage adviser can assess your circumstances and explain whether any suitable routes may be available.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.
Related Guides
Explore more advice that may help your situation.
Low Credit Score Guides
See how low scores interact with smaller deposits in lender decisions.
Credit Repair Guides
Steps to improve your credit position if deposit funds are limited.
Joint Applications (Bad Credit)
Learn how things work when applying with a partner who has stronger credit.
Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.