Getting on the property ladder can be a real challenge. One of the main reasons for this is because in order to secure a mortgage, typically a healthy deposit needs to be paid.

For some, saving for a deposit is a relatively easy thing to do. But many people find this to be extremely challenging. 

With the price of housing and the cost of living going up, for many people the chances of saving a decent amount for a deposit will inevitably take a hit.

This makes the prospect of the UK’s first ever zero deposit mortgage hitting the market a particularly interesting prospect.

In the latest Roots Mortgages blog, we take a look at what this is and what it could mean for potential buyers.

Who is behind this?

Proportunity is a London-based lender with an aim of making home ownership a possibility for everyone.

The company is looking to support 1 million people secure a home of their own by 2030, and has an ethos very much focused on keeping things simple in what can be a complicated industry. 

The company has to date helped finance over £100 million worth of property sales, and Proportunity is committed to harnessing innovation in the mortgage market.

Tell me about this zero deposit mortgage then

Essentially, Proportunity is working towards the release of a zero percent deposit mortgage product for home ownership. 

This means that a Proportunity loan would cover the entire value of the home a person is wishing to buy, rather than just a large percentage of the property’s cost.

The company says that people who can afford to pay rent can afford to pay a mortgage, and is encouraging people to make their money work for them and not their landlord.

According to the Proportunity website, ‘Our Proportunity Home Index (PHI) helps identify which homes are better or fair valued, so when we invest with you, we believe we’re investing together in a good thing – and that’s what enables us to give you the full loan value for your new home.’

There is a dedicated page on the Proportunity site where people can find out more and register their interest in the zero deposit mortgage opportunity.

Is a zero deposit too good to be true?

If you are struggling to put together a deposit but are keen to get on the property ladder as soon as possible, then the idea of zero deposit is naturally going to appeal.

What is less clear at this stage is what kind of properties may be available, and what kind of terms and conditions will apply when taking out a mortgage of this type.

It’s also important to note that at present, the zero deposit mortgage is still in development. But the fact that Proportunity has promoted the product makes it seem like it is something the company is committed to pushing out there.

Ultimately, it’s too early to tell if this is a gimmick or a genuine option for buyers. If it does take off and other lenders follow suit however, then this has the potential to be something of a watershed moment within the mortgage market.

For contractors and freelancers who have long faced challenges around proving affordability, a zero deposit mortgage is something many will naturally be curious about.

What’s not clear is how things might work in practice for those seeking a contractor mortgage or freelancer mortgage. In fact, a lot is yet to be clarified about how this will all work in reality.

Ultimately, the proof will be in the pudding with zero deposit mortgages, and whether they are here to stay or something of a publicity stunt. It’s good for lenders to be looking into ways to make homes more affordable, but whether this is a way to go about it remains to be seen.