Cambridge Building Society has widened access to its First Step range with a 98% LTV five-year fixed-rate mortgage available to intermediaries across the market.
The product requires a minimum 2% deposit and is aimed exclusively at first-time buyers, with gifted deposits from close family members permitted.
Loans are available up to £500,000, while applicants can borrow at a loan-to-income ratio of up to 5.5 times income, subject to the society’s lending criteria.
The mortgage can also be used for the purchase of new-build houses, with builder incentives considered as part of the application.
AFFORDABILITY ASSESSED AT PAY RATE
Cambridge Building Society will assess affordability for the five-year fixed rate using the pay rate. The new mortgage sits alongside its existing two-year fixed-rate First Step product and includes a free valuation.
The launch comes as building societies seek to address the deposit constraints facing prospective first-time buyers. Research from the Building Societies Association found that 47% of aspiring homeowners had never spoken to a lender or mortgage broker about their options.
Its research also found that 67% believed they could buy a property sooner than expected after finding out about low and no-deposit mortgages offered by building societies.
Dan Barker (pictured), product and propositions manager at Cambridge Building Society, said: “Many first-time buyers continue to face challenges raising a significant deposit, despite being able to demonstrate a strong track record of managing their finances and meeting monthly housing costs.
“Our First Step range has been designed to help bridge that gap and support more people onto the property ladder.
By introducing a five-year fixed-rate option, we’re providing intermediaries with greater flexibility and giving their clients additional certainty over their monthly payments at a time when affordability remains a key consideration.
“We know there are many aspiring homeowners who may not realise the options available to them, and we would encourage anyone considering a first home purchase to speak to a mortgage intermediary to understand what support may be available.”
