First-time buyers can now access higher loan-to-value mortgages without relying on parental financial assistance. Newcastle Building Society has launched its First Step mortgage, enabling individuals to borrow up to 98% of a property’s price, with the requirement that the applicant must contribute at least £5,000 or 2% of the property’s price as their deposit, whichever is higher. This mortgage has a fixed interest rate of 5.25% for five years and is specifically designed for those needing to get on the housing ladder without help from the “bank of mum and dad”.
According to Moneyfacts, there is now a 17-year high in the availability of mortgage deals at 90% and 95% loan to value (LTV), offering more options to those who can afford larger deposits. Notable is Marsden Building Society, which offers a five-year fixed rate at 4.69% with an arrangement fee of £998, or a rate of 4.79% without a fee for those with a 95% LTV.
The introduction of this mortgage aims to support a broader range of first-time buyers, particularly those who have been saving for a deposit on their own. Ben Smith, Newcastle Building Society’s head of commercial and product development, mentioned that “First Step has been designed for homebuyers in particular who have worked hard to save a deposit by themselves and are ready to get on the property ladder.”
David Hollingworth from L&C Mortgages noted that while the new loan is a positive development for buyers worried about rising property prices, it might also provide an opportunity for parents to assist with other expenses such as survey and legal fees. Moreover, many low-deposit mortgages typically require a guarantor or a relative to provide a savings deposit as security, though Skipton Building Society offers a 100% loan for those with a strong rental payment history.
Rachel Springall from Moneyfacts insisted on the importance of lenders supporting buyers with small deposits to keep the market active, yet she also cautioned against high loan-to-value mortgages, warning of potential risks if house prices were to significantly drop. She emphasized the need for prospective buyers to seek advice before committing to any high-LTV mortgage agreements.
Source: https://www.theguardian.com/money/2025/sep/13/uk-98-per-cent-mortgage-first-time-buyers-newcastle-building-society
