NEWCASTLE, U.K.–Newcastle Building Society is offering first-time buyers a new low-deposit loan, but with it twist—it says it will reject any borrower who had family help with their savings
The building society is offering loans of up to £350,000 to borrowers who can pull together a deposit as low as £5,000 — or 2% of the property’s value, whichever is higher, according to the Times. But the deposit must come from their savings: cash gifts or loans from third parties will not be accepted, the report added.
It’s a five-year deal at a fixed rate of 5.25% over a loan term of up to 35 years.
“First-time buyers continue to face real challenges with rising house prices, higher rental costs and the cost of living. It’s especially difficult for those who don’t have access to the Bank of Mum and Dad,” Ben Smith from Newcastle Building Society told the Times. “That’s why we’ve launched this mortgage to give more options to those who have worked hard to save and have built a deposit by themselves.”
The Leading Source of Funding
According to the Times, the Bank of Mum and Dad has become a leading source of funding for first-time buyers as house prices have soared — the average cost of a property has gone up 74% over the past 15 years to £269,000.
Some 61% of 2,000 adults questioned by the Building Societies Association in July said that finding a deposit was a barrier to buying. The proportion has been above 50 per cent in the quarterly survey in all but one three-month period since 2016, the Times reported.
Newcastle Building Society offers other loans that allow gifts from the Bank of Mum and Dad, but a borrower needs a bigger deposit. It has five-year fixed at 4.95% for those with a 5% deposit, 4.9% with a 10% deposit and 4.66% with a 20% deposit.
