Newcastle Building Society has introduced a new mortgage product called the First Step mortgage, which allows first-time buyers to borrow up to 98% of the property’s value. Notably, applicants cannot receive deposit assistance from family members under this scheme. This initiative is aimed at individuals who have saved independently to enter the housing market.
In 2022, data from Savills indicated that over half (52%) of first-time buyers received financial support from their parents while purchasing homes. The First Step mortgage features a fixed interest rate of 5.25% for five years and represents one of the few options available for loans exceeding 95% of a property’s cost. For potential buyers who can provide a larger deposit, financial data firm Moneyfacts reports that the number of mortgage deals offering 90% and 95% loan-to-value (LTV) ratios has reached a 17-year peak.
Under the First Step program, borrowers can apply for mortgages ranging between £96,000 and £350,000, with a minimum deposit requirement of at least £5,000 or 2% of the property’s price—whichever is greater. Applicants must also disclose the source of their deposit.
Representatives from Newcastle Building Society state that this product is part of a broader movement within the mortgage market to facilitate access for first-time buyers seeking larger loans. Experts, including David Hollingworth from L&C Mortgages, suggest that this loan can assist buyers who are anxious about rising property prices and are facing challenges in saving enough for a deposit amid high living costs.
While some low-deposit mortgages require a guarantor or mandate that relatives deposit funds in linked savings accounts, other lenders, such as Skipton Building Society, offer options for 100% loans for renters with a solid payment history. Observations have been made regarding the risks associated with high LTV mortgages, as borrowers may have limited equity in their homes, making them vulnerable should property values decline. Financial advisers stress the importance of seeking guidance prior to committing to such loans.
Source: https://www.theguardian.com/money/2025/sep/13/uk-98-per-cent-mortgage-first-time-buyers-newcastle-building-society