What is a 100% mortgage?

How do 100% mortgages work?

A 100% mortgage allows you to borrow the entire value of the property without a deposit.¹ This mortgage type is designed for first time buyers with a strong rental history who want to get on the property ladder. Not all providers offer 100% mortgages, and each has its own terms and conditions, so it can be worth shopping around or consulting with a mortgage adviser to find the best offer for your circumstances.

Key features of 100% mortgages

If you’re thinking about applying for a 100% mortgage, some of the key features to note are:

• No deposit required. With most mortgage types, lenders require a minimum 5% deposit to secure the property. However, with a 100% mortgage, you won’t need to put down any deposit on the property you’re purchasing

• High loan-to-value (LTV) ratio. As no deposit is required, the loan covers 100% of the property’s value. This can result in higher interest rates, as lenders see this as a higher risk

• Strict eligibility criteria. 100% mortgages are designed for first time buyers who may not be able to save for a deposit. However, each lender has a range of additional eligibility criteria you’ll need to meet

Benefits of 100% mortgages

Some of the potential benefits of 100% mortgages include:

• First time buyers may be able to get on the property ladder sooner. If you’re a first time buyer but are struggling to save for a deposit, a 100% mortgage could help you take your first step onto the property ladder sooner

• Monthly mortgage payments might be lower than your rent. In some cases, depending on rates, individual circumstances and property type, monthly mortgage payments may be similar to your rent. Please note that this varies and is not guaranteed

• You can build up equity in your home. Unlike renting, your monthly mortgage payments contribute towards homeownership ²

Risks and considerations

While 100% mortgages may have several benefits, there are some risks and considerations associated with this mortgage type, such as:

• Interest rates may be higher. Because 100% mortgages have a higher LTV ratio, lenders could see them as higher risk. This may result in higher interest rates, increasing the overall value of the loan.

• A guarantor may be required to secure the loan. Depending on your circumstances and the lender’s terms, you may need a guarantor for a 100% mortgage.

• Lenders may review your rental payment history. Many 100% mortgages are ‘track record mortgages’, meaning the lender takes your ability to make regular monthly rental payments into account when assessing your application. If you’ve been renting for more than 12 months and haven’t missed any payments, this can help demonstrate reliability to lenders.

• It can be easier to fall into negative equity. Due to the high LTV ratio on 100% mortgages, the loan may be higher than the property value if market prices fall

What is the Skipton Track Record mortgage?

The Skipton Track Record mortgage is a 100% mortgage for first time buyers. It’s a five-year fixed-term mortgage designed for renters who want to get on the property ladder, or those who haven’t owned a property in the last three years.

Eligibility criteria for the Skipton Track Record mortgage

To apply for Skipton’s Track Record mortgage, you must meet the following eligibility criteria:3

• Be aged 21 or over

• Want to borrow up to £600,000

• Have not owned a property in the UK in the last three years

• Have no missed payments on debts or credit commitments in the last six months

• Are not looking to buy a property in Northern Ireland

• Can show evidence of making all rent payments on time for 12 consecutive months within an 18-month period, whether you’re a sole applicant or making a joint application

Pros and cons of the Skipton Track Record mortgage

Is a 100% mortgage right for you?

If you’re a first time buyer, 100% mortgages may be worth exploring, provided you can meet the eligibility criteria of your chosen lender and it fits with your individual circumstances. However, there are many other mortgage types available, so you can speak to a mortgage adviser to compare products and find out which options suit your circumstances.

Alternative options

If a 100% mortgage isn’t right for you, there are other routes that might help you buy a new home, such as:

• Low-deposit mortgages. 95% mortgages require just a 5% deposit. Learn more about buying a new build with a 5% deposit in our guide

• Developer schemes. If you’re buying a new-build home, many developers offer low-deposit schemes to support you. These might include schemes like or Deposit Boost

• Government-backed schemes. The First Homes scheme is a government-backed scheme aimed at eligible first time buyers, offering up to 30% discount on the property purchase price

Thinking about buying a new-build home? Contact our Sales Advisers to learn more about our developments and start your home buying journey today.

Disclaimer:

This article is for general informational purposes only and does not constitute mortgage advice. We would always recommend that advice is taken from a regulated mortgage adviser regarding your specific circumstances.

References: 

1. https://www.skipton.co.uk/mortgages/first-time-buyers/track-record-mortgage ↩
2. https://www.moneysupermarket.com/mortgages/100-mortgages/ ↩
3. https://www.moneyhelper.org.uk/en/blog/everyday-money/what-is-a-100-percent-mortgage ↩