Zero-deposit mortgages actually cost homeowners thousands more

Zero-deposit mortgages can be an easier way onto the ladder – but they aren’t cheaper (Picture: Getty Images) When it comes to buying a home these days, cobbling together a deposit takes some serious saving. Many first-time buyers end up relying on the Bank of Mum and Dad. One 2026 study from Barclays found four in 10 homeowners (39%) received a financial contribution from their parents towards their first home. Against such a gruelling backdrop, it’s tempting to consider schemes which make it easier to get on the ladder. One such option is a zero-deposit mortgage, where you can qualify for a home loan without putting down any cash up front. Given the average FTB down payment now sits at £61,090, this sounds like a sweet deal — but while it may get you on the ladder sooner, it can end up costing you more in the long run. Ask Metro Use AI to go deeper into the stories you care about – powered by Metro and trusted publications. Using the £471,687 average price of a starter home in the capital, estate agent Benham and Reeves ran the numbers. Ready to start your homebuying journey? You can access completely fee-free mortgage advice with London & Country (L&C) Mortgages, a partner of Metro. Customers benefit from: – Award winning service from the UK’s leading mortgage broker – Expert advisors on hand 7 days a week – Access to 1000s of mortgage deals from across the market Unlike many mortgage brokers, L&C won’t charge you a fee for their advice. Find out how much you could borrow online Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage. After five years, you’d still owe more than £400,000 (Picture: Getty Images) With a zero-deposit mortgage, where you’re not putting any initial money towards the house and therefore need to borrow the full price, the estimated monthly repayments would come in at £3,331. However, a 15% deposit (roughly £70,753) means a lower mortgage of £400,934, reducing those monthly repayments to £2,226 per month. Paying that off is still a huge financial commitment, but that extra outlay at the start cuts your month-to-month outgoings by £1,105 — a welcome chunk of extra disposable income from every paycheck. Then, there’s the long-term interest to factor in. During the first five years of homeownership alone, a buyer with a zero-deposit mortgage pays an estimated £158,104 in interest on the typical £471,687 home. Meanwhile, putting down a 15% deposit would result in paying £84,834 within the same time period. Effectively, this means the no-deposit option ends up costing £73,270 more. What do you think about zero-deposit mortgages? They;re a good solution for people who can't save for a deposit.Check They end up costing too much in the long term.Check I need more information to decide.Check Sign up to Metro’s The Key newsletter for must-read property stories, DIY hacks and tips for buying a home. This isn’t the only drawback; going sans-deposit also means it’ll take you longer to build equity, which is the amount of money you’ve put into a home, and therefore the portion of the property you own. After five years, taking this road would mean you’d still owe £429,945, compared to £352,193 for someone with a traditional mortgage — a stark difference of £78,000. Marc von Grundherr, director of Benham and Reeves, says of the new research: ‘For many aspiring buyers, saving a deposit remains the single biggest barrier to homeownership and products such as a 100% mortgage undoubtedly provide an important route onto the property ladder.’ How do zero-deposit mortgages actually work? The latest addition to the selection of zero-deposit mortgages, with a loan-to-value ratio of between 95% and 100%, is from Metro Bank. There are limits to it. For one, the policy will only cover homes worth up to £675,000, but considering the average home in the UK currently costs £376,191, while in London the figure sits at £670,067, it should be enough for most first-time buyers. This is also a Joint Borrower Sole Proprietor (JBSP) mortgage, meaning you need between one and four immediate family members to apply alongside you. While the fact their income is used in the affordability assessment (typically 4.5x all applicants’ combined annual earnings) means you may be able to borrow more than you would otherwise, you’ll own the home. However, joint borrowers will be held responsible for paying if you can’t — and defaulting will impact their credit history as well as your own. Metro Bank says lending is subject to meeting ‘enhanced eligibility requirements’, but borrowers will ‘receive specialist mortgage advice before applying’ and won’t have to pay a product or valuation fee. Its also adds that the new mortgage — offered at a maximum term of 35 years, with five-year fixed rates of 6.99% —isn’t available for properties above commercial premises or new builds. That said, prospective buyers shouldn’t solely focus on ways to avoid paying a deposit. Marc argues you need to weigh up the longer-term cost of borrowing the full value of a property, because there can be a substantial difference in both monthly repayments and interest paid over the first few years. ‘That certainly doesn’t mean these products are a bad idea,’ he explains. ‘For many buyers, they’ll provide the only realistic opportunity to purchase a home and building some equity on your own home is certainly better than nothing. Deals of the Day Wuka launches the UK’s first period-proof swimwear for heavy flows Bridgerton fans are rushing to buy these new Netflix-inspired perfumes now £12 off The affordable summer wardrobe update you'll wear from rooftop drinks to beach holidays The £7.99 lip balm beauty fans love for glossy, hydrated lips just dropped four new shades This Keskine hydrogel mask could fix your summer skin ‘That said, where circumstances allow, taking a little longer to build a deposit can still make a significant financial difference over the life of the mortgage, reducing monthly repayments, lowering interest costs and helping buyers build equity at a much faster rate.’ Do you have a story you’d like to share? Get in touch by emailing MetroLifestyleTeam@metro.co.uk Arrow MORE: First UK-built crewed stealth fighter jet in 40 years nears completion Arrow MORE: Bus driver sacked for catching thief says it’s not worth tackling fare dodgers Arrow MORE: Driverless ‘pods’ could soon be used on Hammersmith Bridge instead of cars The Key Sign up for must-read property stories, DIY hacks and tips for buying a home.