Newcastle Building Society has the First Step mortgage. This new product is uniquely positioned to assist first-time buyers in earning their way to home ownership. This innovative mortgage product allows borrowers to access loans covering up to 98% of a property’s value, thus easing the financial burden on those attempting to enter the housing market. This new offer allows more people and families to afford to borrow larger amounts. It works best for people who would find it hardest to save for an increasingly common, big deposit.
This is an increase of £20,000 on 2022, allowing applicants to borrow between £96,000 and £350,000 on the First Step mortgage. In order to qualify, borrowers must have a cash deposit. It should be at least £5,000 or 2% of the value of the property, whichever is higher. Their mortgage has a fixed interest rate of 5.25% for the next five years. This new feature is huge, making it an enticing option for a lot of first-time homebuyers.
Ben Smith, the head of commercial and product development at Newcastle Building Society, emphasized the organization’s commitment to supporting first-time buyers.
“We’re committed to helping first-time buyers whatever their background, and our mortgages support a range of people and their circumstances, including those with gifted deposits.” – Ben Smith
This new initiative is focused on those who cannot rely on established, conventional financial support structures, such as that of family—often referred to as the “bank of mum and dad.” Smith’s words show a real acknowledgment of the financial challenges and realities faced by Americans seeking to purchase their first home.
Additionally, the First Step mortgage provides borrowers with higher loan amounts. Applicants are required to identify the origin of their deposit. This feature is important in inadvertently promoting responsible lending practices.
As with any new product, industry experts have been generally positive about this new mortgage product. L&C Mortgages’ David Hollingworth welcomed the potential for this loan to assist more potential buyers. It provides an answer to anyone concerned that escalating housing costs will undermine their savings plan.
“It’s a great option for those that can show they’re able to afford the mortgage but are struggling with the demands of saving enough for a deposit while meeting steep rent and other costs of living.” – David Hollingworth
Rachel Springall, a spokesperson at Moneyfacts, warned there are risks with borrowing at such high LTVs. She emphasized that people at the high end of this range tend to have very little home equity. This could put them in a dangerous position once property values begin to fall.
“Those borrowing at the higher ends of the loan-to-value spectrum will have little equity in their homes as a result, and disaster could strike if house prices were to plummet.” – Rachel Springall
Springall drew attention to how important lender backing is for buyers relying on deposits of modest size. Many do not have such familial support to assist them in realizing their homeownership aspirations.
“Not everyone can be reliant on the bank of mum and dad to get a foot on to the property ladder. This is why it’s so fundamental for lenders to support buyers with small deposits, to keep the market moving.” – Rachel Springall
She further urged would-be borrowers to get advice before signing any mortgage deal.
“Seeking advice before entering any arrangement is vital.” – Rachel Springall