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There are many obstacles that prevent people from getting onto the property ladder, but one of the biggest at the moment is the cost of living crisis and the fact that salaries haven’t kept pace with inflation, meaning that many are simply priced out of the market altogether.

But there is light at the end of the tunnel for those of you who have been finding it hard to save up enough for a deposit – in the form of no-deposit mortgages, which have just started slowly re-entering the market once again.

What are no-deposit mortgages?

Back in 2023, Skipton Building Society launched the first such product in the UK since 2008 and now further options from alternative lenders are available, where borrowers are able to take out loans of up to 100 per cent of a property’s value… so it’s possible that this trend will gather pace over the next few years.

Of course, you always need to read the fine print (as you do with any type of mortgage deal!) and bear in mind that these 100 per cent no-deposit mortgages will come with conditions attached… typically in the form of significantly higher mortgage rates.

Other caveats to look out for include caps on maximum borrowing (based on income), while you may also find that you’re restricted as to the type of property you can buy. April Mortgages, for example, will only lend on houses and not for the likes of flats or new-build homes.

And for Skipton, you’ll need to have been renting for at least 12 months in a row out of the last 18, as well as being up to date with rental payments. The amount you can borrow will also not be more than the equivalent of what you pay for your monthly rent.

What about negative equity?

While 100 per cent mortgages can be useful if you’re struggling to buy a home, they’re not just more expensive… they also come with a greater risk of negative equity, where the mortgage value exceeds that of the property value, which can happen if property prices drop significantly.

It’s always worth talking through your options with a mortgage broker, as it can be a difficult landscape to navigate – so if you need any further guidance or advice, get in touch with the BR Needham team today.