Buying a home in the UK without a deposit in 2026

Not all of our clients have enough savings to immediately collect the deposit that banks require. Therefore, we have decided to refresh this article and address the current market situation. If you are planning to buy a home in the UK and don’t yet have a deposit, be sure to read today’s post to the end.

Is it possible to buy a house in the UK without a deposit?

Buying a house in the UK because of property prices is a huge expense. Let’s say even more - often, it is the biggest expense of a lifetime. The latest edition of the UK House Price Index (as of February 2026) shows that the average value of a property in the UK was £ 271,188 and over the year, this has increased by 2.5%. Although many of our clients are buying properties for smaller amounts, for example around £220,000, we continue to talk about really big money.

Buying a home in the UK without a deposit is difficult but possible

Although for many years, banks have required a deposit ( of varying amounts), there has been a fundamental change to this in May 2023 - Skipton Building Society has released the first no deposit mortgage in the UK. Although the terms of the offer are quite restrictive (First Time Buyer status is required, among other things), it is definitely worth looking into. Some of our clients have already received this mortgage. If you would also like to give it a try, be sure to contact us!

A similar solution may be a so-called guarantor mortgage, in which the guarantor undertakes to repay the loan if the person who entered into the original agreement with the bank is unable to meet their obligation. Special types of these products, such as a family deposit mortgage, require a deposit to be paid into a special account – such a security deposit also reduces the bank’s risk to such an extent that it will be willing to grant a loan without a down payment.

Why do banks require a deposit?

Buying a home in the UK is a long-term decision. Repayment period of the mortgage is often 25 years, and during that time literally anything can happen! Just think how much the world has changed since 2001….

It is for this reason that banks require additional verification of your intentions. The fact that you have managed to accumulate 5 or 10% of the value of the house you are buying suggests that you can manage to repay your commitment, and this is very important to any lender. What’s more, your own contribution protects the bank from loss in the event of the property being auctioned off to people who don’t pay back the money on time.

It may happen that you decide to buy a house because of the high rental costs. The high rent makes it difficult to save, but there is no other way - for a few months, you just have to cut back on your expenses and increase your income. Remember, however, that your own contribution is not the only expense you will have to cover out of your own pocket. With a mortgage you will also not finance the conveyancing costs, the application fee, the cost of a mortgage adviser and the building report fee. Take these costs into account when you are counting your required cash reserve.

Importantly, from the second half of 2026, your rent payment history will affect your creditworthiness, so make sure you pay your rent regularly and on time.

How much is the deposit in the UK?

Banks use the concept of Loan to Value when granting mortgages. LTV is the ratio of how much you borrow to the value of the property you are buying. If your property is worth £100,000 and the bank lends you £75,000, then the LTV is 75 per cent.

Let’s try to outline the amount of equity and LTV for a £250,000 property purchase.

• 5% - £12,500 (LTV 95%)

• 10% £25,000 (LTV 90%)

• 15% £37,500 (LTV 85%)

• 20% £50,000 (LTV 80%)

Most banks offer mortgages with an LTV of between 95% and 60%. The lower the Loan to Value ratio, the better the terms of the offer.

If you have less cash, be sure to check out our article under the title Buying a home in Wales.

Higher own contribution = more favourable mortgage

We already know that buying a house in the UK usually involves raising a 5% deposit. There is another reason for having as large a deposit as possible. This reason is the possibility of getting a mortgage with a lower interest rate.

We already know the relationship deposit = lower risk for the bank. By increasing our deposit, the bank will, in addition to simply agreeing to a mortgage, also offer us better terms.

These two reasons are certainly enough but if you think about it for a moment, having as large a deposit as possible also works in your favour. By having a large deposit, you reduce the amount of the mortgage and therefore shorten the repayment period or reduce the monthly instalments. Either solution clearly increases your security, because in the event of emergencies such as illness or redundancy, you will find it easier to pay back a lower instalment.

Remember one inconvenience - the deposit is set in thresholds, that is, typically, it is a multiple of 5% of the value of the whole property (5,10,15% etc). If you raise, say, 17%, it’s potentially a better idea to put down a 15% deposit and use the remaining funds to overpay your obligation.

Why is it important to have as high a deposit as possible?

• Cheaper monthly repayments - It may seem obvious, but the bigger your deposit, the smaller your mortgage will be and the cheaper your monthly repayments will be;

• Better mortgage deals - A bigger deposit will also make you a less risky customer for lenders, and as a result they will be able to offer lower interest rates. The differences can be really big!;

• Better chances of approval - All lenders check the creditworthiness of applicants to determine whether they can afford the mortgage repayments. Your income, expenditure, savings and stability of employment are analysed. If you only make a small deposit, it is more likely that you will not pass the standard creditworthiness threshold, limiting the number of available banks willing to lend you the required amount;

• Have a bigger budget to buy - buying a house in the UK involves spending a large sum and usually, there is too little money, not too much. Most lenders will lend no more than 4.5 times your annual salary, so the extra savings will come in handy for financing more expensive properties;

• Less risk - If you own more of your home outright, you are less likely to fall into negative equity. This is an unfavourable situation where the value of the property is less than the value of the mortgage you have taken out.

Summary

Buying a house in the UK is a major event for families living in the Islands. Despite the high cost, it is usually a cost-effective and very forward-looking decision, as it safeguards the next generation from financial problems. If you want to take care of your loved ones, contact us! We can help you choose a mortgage that suits your possibilities and advise you on how to take care of your finances.