The Cambridge Building Society has relaunched its First Step mortgage, offering first-time buyers across England and Wales a route into home ownership with a 2% deposit.

The mutual said the product would initially be available direct and through selected intermediary partners, as it looks to address one of the biggest obstacles facing would-be buyers: raising a deposit while managing high living costs.

First Step is available only to first-time buyers and offers lending of up to 98% loan to value, with a maximum loan size of £500,000.

The society will lend up to 5.5 times household income where affordable, while gifted deposits are accepted and new-build houses can be considered. Self-employed applicants are also eligible, subject to the society’s standard criteria.

The range includes a two-year fixed-rate mortgage at 5.19% and a five-year fixed-rate mortgage at 5.49%. Both products carry a £499 fee and include a free basic property valuation.

Borrowers can overpay by up to 10% a year, allowing them to build equity more quickly if their circumstances allow. Applications will be assessed on individual circumstances rather than credit scores alone, according to the society.

The minimum purchase price is £100,000. The product is not available on new-build flats.

Dan Barker, product and propositions manager at The Cambridge, said: “Saving for a deposit is one of the biggest challenges facing first-time buyers, particularly renters who are already managing high monthly housing costs.

“By relaunching our First Step mortgage, we’re helping people who can afford mortgage repayments but struggle to save a large deposit to take a realistic step towards owning their own home.

“At the same time, we’ve made sure the product is built around responsible lending, with careful affordability checks and the reassurance of fixed monthly payments.”