The Cambridge Building Society has unveiled a new low deposit mortgage which offers reduced monthly payments in the first year.

The ‘stepped rate’ discount mortgage requires a 5% deposit, while offering a free valuation and a low application fee. The three year mortgage product starts at a lower variable rate of 3.99% giving people reduced monthly payments at a time when they need the extra funds to decorate and furnish their home.

The rate then moves to a variable rate of 4.89% in years two and three.

“First time buyers have always been important to The Cambridge and we have continued to develop products and services that help to meet their needs,” said Andy Lucas, commercial director at The Cambridge.

“This stepped rate product is great for those people who have a smaller deposit and would benefit from having smaller monthly repayments in the year.

“Buying a house isn’t just about the deposit – it is about the whole package and we have looked at each area to ensure that we provide an overall proposition for the customer.”