Newcastle Building Society Launches 98% LTV Mortgage for First-Time Buyers
For many aspiring homeowners, the dream of getting onto the UK property ladder can feel out of reach — especially without financial help from parents. According to Savills, over half (52%) of first-time buyers last year received assistance from the “Bank of Mum and Dad.” Newcastle Building Society is now offering a solution for those determined to go it alone.
The First Step mortgage allows first-time buyers to borrow up to 98% of a property’s value, meaning significantly lower deposits than traditional deals. According to Newcastle Building Society, the deal includes:
Interest rate: 5.25% fixed for five years
Minimum deposit: £5,000 or 2% of the property price, whichever is higher
Property price range: £96,000 – £350,000
Purchases above £250,000 require a larger deposit
Borrowers must declare the source of their deposit
According to UK Finance, the average deposit for a first-time buyer in 2025 is around £45,000. This mortgage could reduce the required deposit by up to £40,000, making homeownership far more accessible for self-savers.
Who This Mortgage Helps
This mortgage is tailored for those who have saved independently but may struggle with rising rents and living costs. According to HM Land Registry, first-time buyers make up approximately 36% of all property purchases in England and Wales. The First Step mortgage particularly benefits:
Renters paying an average of £1,000 per month according to ONS, who want to transition to homeownership
Savers who have accumulated funds gradually and want to enter the property market sooner
Buyers ready to commit to homeownership without relying heavily on gifted deposits
Key Considerations
While a high loan-to-value (LTV) mortgage can help buyers secure a property sooner, it comes with some risks:
Lower equity: Buyers will have limited ownership in the property initially, which increases exposure if prices fall
Additional costs: Legal fees, surveys, and other upfront expenses still apply
Regional price variations: According to Nationwide, average house prices for first-time buyers vary significantly:
North East: £138,000
North West: £166,000
London: £456,000
This shows the 98% LTV product is particularly beneficial in higher-cost areas.
Affordability ratio: According to Bank of England, first-time buyers spend around 35–40% of gross income on mortgage repayments, highlighting the need for careful financial planning.
Why It Matters for First-Time Buyers
According to Newcastle Building Society, the First Step mortgage is part of a growing trend to make homeownership more accessible. It addresses the challenge many first-time buyers face: saving a large deposit while covering rent and living costs in a high-demand market.
Experts note that products like this can stimulate activity in the first-time buyer segment, supporting the broader housing market and offering opportunities for young professionals to secure property sooner.
How to Use This Opportunity Strategically
At Property Like A Pro, we encourage buyers to approach mortgages with data-led planning. Tools like our First-Time Buyer Calculator allow prospective homeowners to:
Model affordability based on income, deposit, and mortgage rates
Understand potential monthly repayments, including additional costs
Compare different LTV scenarios to make informed decisions
By analysing the numbers upfront, buyers can confidently navigate high LTV mortgages and understand the potential risks and rewards.
Final Thoughts
The Newcastle Building Society First Step mortgage represents a significant opportunity for first-time buyers who have been saving independently. With high LTV mortgages, careful planning and strategic use of affordability tools can make homeownership a realistic goal.
Use our First-Time Buyer Calculator today to model affordability, deposit requirements, and monthly repayments — helping you make informed, confident decisions in today’s housing market.