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Why do you need a deposit for a mortgage?

9 september 2022

If you are thinking of buying a house or apartment, you should know that banks usually lend you a maximum of 80% of the value of the property you want. This means that you should have enough savings to pay a deposit of 20%, plus an additional 10% for the processing costs of the sale (taxes, notary, framing, and agency). 

Indeed, applying for a mortgage without a deposit will significantly reduce your chances of approval. However, some banks are willing to lend you more than 80% and up to 100% in certain cases. We explain this in detail in the following sections:

  1. Negotiating with a good profile

Because the risk that banks assume when issuing an interest-free mortgage is higher, they require your credit profile to repay the loan. This means that you have job stability, seniority, a high salary, and an indefinite contract. 

In some cases, many companies do not disclose that they are eligible for this type of financing approval. Therefore, if your financial situation is very good, negotiate directly with the bank to get a 90 percent or even 100 percent mortgage.

  1. Hire a mortgage broker

This is the best way to get a mortgage and buy a house without a deposit. The great advantage of hiring these financial intermediaries or brokers is that they will find you the cheapest mortgage according to your specifications and negotiate the best conditions for you. They know the real estate industry inside out and know which banks will lend up to 100% unadvertised.

  1. Buy apartments from banks

Some banks provide up to 100% mortgage financing for the purchase of your home. Most of these properties have been confiscated, so the organizations offer better conditions for release. 

Buying these homes is that you do not need a deposit to cover the 20% that banks do not usually finance. However, you should consider that houses owned by financial institutions have several drawbacks: their offer is limited to what each company has, and they may be in poor condition. If you decide to buy these properties, ensure they are in good condition.

  1. You will need a deposit to cover the selling costs.

Remember that even if the bank gives you a mortgage without a deposit to finance the purchase of your home 100%, you must have sufficient guarantees to pay the expenses related to the operation (taxes, notary, framework, and administration): 10% of the sale.

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