Renters in the UK are now being offered a unique opportunity to get on the property ladder without the need for a deposit, thanks to a new 100 per cent mortgage launched by Hanley Economic Building Society in Stoke-on-Trent.
The mortgage, branded as a ‘Rent to Own’ scheme, is aimed at renters who can afford monthly mortgage payments but struggle to save the usual 5–10 per cent deposit that traditional lenders require. It represents a potential lifeline for first-time buyers unable to access help from family savings or the so-called “Bank of Mum and Dad.”
Through this scheme, homebuyers can borrow up to £350,000 at a fixed interest rate of 5.79 per cent, available as a five-year fixed deal. Applicants must have an annual income of at least £25,000, and the total loan is capped at 133 per cent of their current monthly rent.
To put this into perspective, someone paying the UK average rent of £1,366 per month could qualify for a mortgage where monthly repayments would be up to £1,817, making the transition from renting to owning more manageable for many households.
A key eligibility criterion is a spotless rental record. Borrowers are required to prove they have paid rent on time for at least the past 12 months. This ensures that those who have consistently managed rental payments are given priority in the scheme.
For many renters, this could be the first realistic route to homeownership, especially for those who can cover mortgage repayments but are unable to accumulate a sizeable deposit. The scheme helps bridge the gap between renting and buying, which has long been a challenge in the UK housing market.
Ranald Mitchell, director at Norwich-based Charwin Mortgages, noted that renters have already been paying mortgage-sized bills for landlords for years. “If you can demonstrate a strong rent payment history and the new mortgage payments align with what you already pay, this could allow you to purchase a home without needing a large deposit,” he said.
However, prospective buyers should be aware that the interest rate is higher than mortgages where a deposit is paid. This means that monthly payments will generally be more expensive than for conventional deals.
For example, someone taking out a £250,000 mortgage over 30 years with Hanley’s 100 per cent deal would pay £1,465 per month. While there are no arrangement fees, borrowers who can manage even a small deposit could access cheaper deals elsewhere.
A five-year fixed mortgage with a 5 per cent deposit of £12,500, such as with Leek Building Society at 4.56 per cent, would cost £1,276 per month, including the £995 arrangement fee. This represents a monthly saving of £189 and an annual saving of £2,268. Over five years, the total saving could exceed £10,000 compared with the deposit-free option.
One major risk with 100 per cent mortgages is negative equity. If property prices fall, the home’s value may drop below the amount owed on the mortgage, potentially making it difficult to remortgage or sell until market conditions improve.
Dariusz Karpowicz, director at Doncaster-based Albion Financial Advice, warned that buyers need to understand the implications. “You’ll be paying interest on the full purchase price at a higher rate, so monthly payments are steeper than with a deposit. The main risk is negative equity if property prices decline, leaving you owing more than your home is worth,” he said.
Other 100 per cent mortgage options exist on the market. Skipton Building Society, for instance, offers a Track Record mortgage that also requires borrowers to show a consistent history of paying rent and allows loans of up to £600,000, giving larger-scale buyers a potential route to ownership.
Shared ownership is another alternative for those unable to save a full deposit. Buyers purchase a percentage of a property, often starting at 25 per cent, and pay rent on the remainder. Over time, they can increase their share, gradually moving toward full ownership.
While shared ownership requires a smaller initial outlay, it has some limitations. Properties are often new-build homes, restrictions may apply to renovations or pets, and additional fees are charged each time ownership is increased. It is a lower-risk option for those who can afford only a modest deposit.
Pete Mugleston, managing director at Derby-based Online Mortgage Advisor, suggested that anyone considering a 100 per cent mortgage should weigh it against shared ownership. “The downside of a 100 per cent mortgage isn’t just the risk of negative equity—it’s also that you’ll pay interest on the full property price at a higher rate, which can make monthly repayments much more expensive,” he said.
“For some, a rent-to-own mortgage may be cheaper than renting over the long term, but it’s always worth comparing with shared ownership. Even a small deposit could result in lower monthly payments and reduced financial risk,” he added.
First-time buyers are increasingly active in the property market. In 2025, they accounted for almost 39 per cent of transactions, up from 35 per cent the previous year. Falling mortgage rates and a slightly less competitive market, partly due to uncertainty around property taxes, helped make this possible.
With mortgage deals like Hanley Economic’s, combined with alternatives such as Skipton’s Track Record mortgage and shared ownership schemes, renters now have multiple avenues to enter the property market. However, experts caution that buyers should carefully weigh interest rates, repayment amounts, and potential risks before committing.
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