Key facts
- Metro Bank is offering a mortgage that allows eligible first-time buyers to borrow up to 100% of a property's value.
- This type of high loan-to-value mortgage, absent since the 2008 financial crisis, is making a comeback.
- Lloyds Bank offers a deal with a minimum £5,000 deposit (around 98% loan-to-value) on homes up to £300,000.
- Santander provides a loan up to 98% loan-to-value for properties up to £500,000 with a £10,000 minimum deposit.
- Skipton and Yorkshire building societies offer 100% and 99% loan-to-value mortgages, respectively.
- Joint borrower, sole proprietor (JBSP) loans, which involve family members or friends as joint borrowers, are also available and in demand.
Metro Bank has become the latest lender to introduce a mortgage product that requires no deposit, allowing eligible first-time buyers to borrow up to 100% of a property's value. This move signals a resurgence in high loan-to-value mortgages, which were largely withdrawn following the 2008 financial crisis.
Lloyds Bank recently launched a similar offering, requiring a minimum deposit of £5,000, equivalent to a loan-to-value of just over 98%. This five-year fixed deal has an interest rate of 5.89% but is capped on properties valued up to £300,000.
Santander also offers a deal allowing borrowing up to 98% of a property's value, with a minimum deposit of £10,000. This five-year fixed-rate loan is available for amounts up to £500,000.
In the building society sector, Skipton and Yorkshire offer 100% and 99% loan-to-value mortgages, respectively. Skipton's product is aimed at current and recent renters, allowing borrowing up to £600,000 at rates starting from 5.55% for a five-year fix. Yorkshire's five-year fixed deal has a maximum loan of £495,000 at 6.44%.
Additionally, the market is seeing increased demand for joint borrower, sole proprietor (JBSP) loans. These allow borrowers to add family members or friends to the mortgage to boost borrowing power without them becoming legal owners. Metro Bank's JBSP deal permits borrowing up to 100% with a maximum loan of £675,000, but comes with a higher interest rate of 6.99%.
Brokers note that while these low or no-deposit mortgages can make home ownership more achievable, they typically come with higher interest rates compared to standard deals requiring a 5% or 10% deposit. For instance, 95% loan-to-value deals start around 5.05% for two-year fixes and 4.95% for five-year fixes.