Newcastle BS offers mortgage for first time buyers - but only if they don't rely on bank of mum and dad

Newcastle’s move is significant because it recognises the growing number of aspiring homeowners who don’t have access to parental wealth. By focusing on those who can demonstrate financial discipline through their own savings, the society is levelling the playing field in a market that too often relies on family support. The headline £5,000 deposit will in reality require closer to £10,000 once legal fees, surveys and moving costs are accounted for, but that still represents a much lower barrier to entry than many competing products. The fixed rate is fair, the 35-year term option helps keep repayments manageable, and the design of the product strikes the right balance between prudence and opportunity. At a time when affordability is stretched and many feel locked out of homeownership, this deal offers a credible and timely route onto the property ladder for thousands who might otherwise be left behind.

This is an interesting product from Newcastle BS, in some way an incentive for those who don't rely upon others for help and save the deposit from their own means. I guess those who save for themselves are more likely to look after their property and finances generally, so they are a better lending risk potentially? It's an interesting approach, highlighting the importance of accurate declaration of the deposit source, but could be a way of pricing for better risk in a similar way lenders price deals for more efficient homes through EPC ratings.

Newcastle Building Society are well known for their appetite for low-deposit mortgages, so this new deal doesn't come as a surprise. This type of innovation should be praised: supporting those who want to get on the ladder as soon as possible, who give signals that they can stand on their own two feet and save a deposit. Hard to tell if this is a direct response to Rachel Reeve's consideration of taxing family gifts or not, but either way it's another lifeline to first-time buyers.

Any lender making it easier to get on the housing ladder is a welcome improvement, however excluding those who could get help from the Bank of Mum and Dad is a little puzzling as to how this improves the chances of those without that help. However we appreciate that lenders like borrowers to have some 'skin' in the game no matter how little that could be. Or perhaps there's some nervousness around the upcoming Doom Budget where there's rumours about a raid on Bank of Mum and Dad?

In todays market, and the current cost of living, Bank of mum and dad is the only option for some people to get on the ladder. I will certainly want to help my 2 children get on the property ladder at their earliest conveniance. Discriminating against an individual because their family can afford to help them is outrageous, will the lenders start to decline mortgages based on affordability next because the applicants parents paid to put them through university and only have their current job because of that?

If you lead a Champagne lifestyle on a lemonade budget and cant afford to buy a house because of your £400 finance agreement on your car or your £100 a month iPhone contract, then you will fail affordability wheter or not your parents gift you a deposit. Penalising an applicant because their parents can afford to make their childs life just that little bit easier stinks of seperatism and was probably a brain wave of an individual who was born with a silver spoon in their mouth.

There is so much choice in the mortgage market at the moment, especially for first-time buyers needing an income stretch or with a really low deposit, that borrowers can shop around and find a deal that suits them. Just because one lender does not offer gifted deposits, others will, because they are so keen to lend. The really low deposit mortgages tend to be available through smaller or medium-sized lenders, so unless you do your research they may be hard to find. It would be great if more of the big lenders offered really low deposit mortgages, not just income stretch deals.
The Bank of Mum and Dad remains as busy as ever, and while low-deposit mortgages offer some relief, they won't entirely alleviate the pressure on parents. Vida and Yorkshire Building Society accept gifted deposits on their really low deposit mortgages.