A new generation of no-deposit products is unlocking homeownership for renters, but not everyone qualifies
After a decade in financial services, Sadia Mehmood (pictured) knows firsthand how homeownership can feel out of reach. “A lot of people are struggling to save due to the cost of living crisis and high rents,” she said. “This product gives buyers an option when they otherwise might not be able to buy.”
Mehmood, now a mortgage broker at The Mortgage Mum, was referring to the return of 100% mortgages – products once viewed as risky relics of the 2000s. Today, they’re making a cautious comeback, with tight eligibility criteria and built-in safeguards designed to support a different type of buyer.
A safety-first approach to lending
Unlike the pre-2008 era, when lenders such as Northern Rock issued self-certified loans with minimal scrutiny, today’s no-deposit offerings come with layers of regulation. Mehmood pointed to Gen H and Accord Mortgages, which have worked closely with the Financial Conduct Authority to introduce clearer lending boundaries.
“Applicants need to earn at least £24,000, can only buy houses – not flats – and must have a clean credit history for three years,” she said. In addition, these loans often include features such as flexible overpayments and gradual rate reductions as equity builds. “The lender also commits to ensuring clients won’t fall into negative equity.”
This, she said, makes the products a far cry from their predecessors. “It’s much stricter now. There are real protections in place.”
Market data supports her view of their limited use. According to the Bank of England, mortgages with loan-to-value (LTV) ratios above 95% made up just 0.3% of all mortgage advances in Q4 2024 – a small but significant marker of cautious growth.
Who benefits – and who doesn't
These new 100% mortgages are not for everyone. Mehmood is careful to qualify the ideal candidate: “They’re best for financially stable individuals – dual-income households, professionals like doctors or directors. These people can afford monthly repayments but have struggled to save a deposit.”
Conversely, they’re not appropriate for those with irregular income, recent credit issues, or unstable financial circumstances. “Lenders don’t want clients who might be unable to manage utility bills, let alone mortgage payments.”
Despite high interest in the product, Mehmood still prioritizes alternatives when they’re available. “If a client has a deposit or family support, we look at all options. A 5% deposit mortgage might offer better rates and help build equity faster.”
Industry response remains mixed
The return of 100% mortgages has drawn praise and caution from across the advisory landscape. Richard Campo, head of growth at Heron Financial, said the new offerings – such as April Mortgages’ no-deposit product – look “very sensible” with clearly defined loan-to-income caps, long fixed terms, and no exit penalties. “This all looks very sensible to me,” Campo said. “Other lenders really should be taking note.”
Yet even Campo views the product as a niche proposition. “Until one of the big six lenders comes to the table with a genuine 100% loan, I think this will play a small but very important role in the market.”
Others were more reserved. Alison Dearman, a broker at Mortgages by Alison, praised the design but warned that real-world complications can introduce risk. “If you need to remortgage due to a relationship breakdown and you don’t meet the lending criteria on your own, the very high ERCs in the early years could be problematic,” she said. “A positive move by April, but to be handled with care.”
Emily Franks of Emily’s Mortgage Services echoed the concern: “I’ve seen more clients in negative equity in the last two years than I have in my entire career,” she said. “As brokers, it is vital that we educate our clients on the risks.”
A viable option for high-rent households
What makes these mortgages sustainable, Mehmood argues, is their alignment with the reality of the rental market. In many areas, tenants are already paying monthly sums that exceed typical mortgage repayments.
“In areas like mine, rents are £2,500-£3,000 a month. If someone can afford that, they can likely afford a mortgage. The only barrier is the deposit,” she said.
The long fixed terms – often 10 to 15 years – might raise eyebrows, but Mehmood highlights their flexibility. “Clients can overpay without penalties if it’s their own money, and the rate reduces as they build equity. It’s a responsible and client-focused approach.”
Mehmood’s move to The Mortgage Mum in 2024 was driven by a desire for greater flexibility after maternity leave. But her client base continues to grow, largely through word of mouth. “With 10 years in the industry, many of my clients come from previous relationships or recommendations from those I’m currently helping,” she said. “I’m not very active on social media – it’s really been the strength of those past client connections.”
As the housing market adjusts to new economic pressures, products like 100% mortgages could offer a bridge to ownership for those priced out by deposit demands. But Mehmood’s advice remains consistent: “Where alternatives exist, we always advise on what’s most cost-effective and sustainable.”
