Cambridge Building Society has expanded its First Step mortgage range with the introduction of a 98% mortgage.
It is a five-year fixed rate mortgage for first-time buyers and requires just a 2% deposit, which can be gifted by close family members.
The mortgage is available on loans up to £500,000 and buyers can borrow up to 5.5 times their income – which is higher than the standard income multiples lenders typically use.
Cambridge said it could be used to purchase new homes and could also be considered for building incentives, subject to lending criteria.
This new five-year fixed-price deal, which includes a free assessment, is designed to sit alongside the association’s existing two-year fixed-price product.
Borrowers can access the deal via their broker or adviser, and it will provide a welcome addition to the growing ‘low deposit’ mortgage market for first-time buyers.
In fact, its launch comes after research by the Association of Building Societies (BSA) found that 47% of aspiring homeowners have never spoken to a lender or mortgage broker about their homeownership options.
The research also found that 67% of aspiring buyers believe they can purchase a property sooner than expected after learning about the low and no deposit mortgage products available from building societies.
Dan Parker, product and proposals director at The Cambridge, said: “Many first-time buyers still face challenges in raising a large deposit, despite being able to demonstrate a proven track record of managing their finances and meeting monthly housing costs.
“Our First Step range is designed to help bridge this gap and support more people on the property ladder. By offering a five-year fixed rate option, we are offering brokers greater flexibility and giving their clients additional certainty about their monthly payments at a time when affordability remains a key consideration.”
“We know there are many aspiring homeowners who may not be aware of the options available to them, and we would encourage anyone considering buying a home for the first time to speak to a mortgage broker to understand what support may be available.”
