Zero-deposit mortgages are making a comeback, with uptake jumping 32% last year as more first-time buyers struggle to save.
According to accountancy firm Lubbock Fine, 622 of these 100% loan-to-value (LTV) products were issued in 2024, up from 470 in 2023, with a total value of £197 million.
These mortgages allow buyers to borrow the full value of a home, making them a lifeline for those priced out by high house prices and stagnant wages.
But they come with strings: applicants must typically earn at least 4.5 times the loan amount, and lenders often require a guarantor, usually a family member.
The products echo the pre-financial crisis era, when lenders like Northern Rock famously offered up to 125% LTV deals.
Today’s versions are more constrained but still carry risks. Lubbock Fine's Andy Noton warns that steep interest rates make repayments tougher and slow equity build-up.
This can leave borrowers vulnerable to negative equity if house prices dip.
"These products can open the door to home ownership," Noton says, "but buyers need to go in with their eyes open."
Most borrowers using these products are young or low-income individuals who can’t rely on parental help. While the products are growing in popularity, the numbers remain modest compared with pre-crisis levels.