Metro Bank has launched a new zero-deposit mortgage with a loan-to-value ratio of up to 100%, aimed at helping first-time buyers get onto the property ladder without a deposit. The mortgage covers homes worth up to £675,000, which is sufficient for most first-time buyers given that the average UK home costs £376,191 and the average London home costs £670,067, according to recent data.
How the mortgage works
The product is a Joint Borrower Sole Proprietor (JBSP) mortgage, meaning applicants need between one and four immediate family members to apply alongside them. The income of all applicants is used in the affordability assessment—typically 4.5 times combined annual earnings—potentially allowing borrowers to access a larger loan. However, joint borrowers are held responsible for repayments if the primary borrower defaults, and defaulting will impact their credit history as well.
Metro Bank states that lending is subject to meeting "enhanced eligibility requirements," and borrowers will receive specialist mortgage advice before applying. The mortgage comes with a maximum term of 35 years, a five-year fixed rate of 6.99%, and no product or valuation fees. It is not available for properties above commercial premises or new builds.
Other zero-deposit options
Metro Bank is not the only lender offering zero-deposit mortgages. Skipton Building Society provides similar products with a higher borrowing multiple of 5.5 times income, rather than 4.5 times. Skipton also offers a Delayed Start mortgage, where payments begin later but interest accrues from day one. Last year, Barclays scrapped its deposit requirement for people buying council or housing association homes under the government's Right to Buy scheme. Previously, Barclays required at least a 5% deposit for such mortgages. Most other major banks, such as Lloyds and Santander, still require a minimum deposit of around £5,000 to £10,000.
Drawbacks of zero-deposit mortgages
While attractive, zero-deposit mortgages carry risks. Money Supermarket notes they often come with higher interest rates and increase the risk of negative equity—where the home's value falls below the outstanding mortgage balance, making it difficult to move without owing more than the property is worth. Marc von Grundherr, director of Benham and Reeves, told Metro: "For the right borrower, 100% mortgages can be a sensible option, particularly where monthly repayments are comfortably affordable, and there's a clear intention to remain in the property for the medium to long term. That said, they do come with a greater degree of financial risk."
He added: "Starting with no equity means homeowners are more exposed should house prices fall, while borrowing the full purchase price generally results in higher monthly repayments and less flexibility when it comes to remortgaging during the early years of homeownership." Von Grundherr emphasized that the key question is long-term affordability and ensuring the mortgage remains manageable if interest rates or personal circumstances change. He suggested that some buyers may benefit from waiting until they have built even a modest deposit, which gives access to a wider choice of mortgage products, more competitive rates, and an equity cushion from day one.
