A major lender has launched a new mortgage deal with a catch that will shut out one of the UK’s biggest funding sources.
Savers pulling together deposits on their own will qualify, but anyone relying on family help will be turned away.
Newcastle Building Society's new offering requires first-time purchasers to demonstrate that their deposits originate exclusively from personal savings.
The institution will reject applications where funds have been gifted or loaned by relatives.
"First-time buyers continue to face real challenges with rising house prices, higher rental costs and the cost of living. It's especially difficult for those who don't have access to the Bank of Mum and Dad," explained Ben Smith from Newcastle Building Society.
The initiative represents an attempt to level the playing field for aspiring homeowners who lack familial financial backing.
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The mortgage permits borrowing up to £350,000 with a minimum deposit of £5,000 or 2 per cent of the property value, whichever proves greater.
Borrowers must commit to a five-year fixed interest rate of 5.25 per cent across a maximum 35-year term.
The stringent requirement that deposits originate solely from personal savings distinguishes this product from conventional mortgages.
Third-party contributions, whether gifts or loans, automatically disqualify applicants."
"That's why we've launched this mortgage to give more options to those who have worked hard to save and have built a deposit by themselves," Smith added.
Mortgage crackdown: Major lender bans deposits from Bank of Mum and Dad
| GETTYThe society continues to provide traditional mortgages accepting parental contributions, though these demand substantially larger deposits from borrowers.
"The move is highly unusual for a mortgage lender. I know of no other lenders imposing such restrictions," stated Aaron Strutt from Trinity Financial mortgage brokers.
Traditional lending practices typically permit family contributions, though donors must provide written confirmation that funds represent gifts rather than loans requiring repayment.
The restriction arrives amid mounting concerns about housing accessibility.
Research from the Building Societies Association revealed that 61 per cent of surveyed adults identified deposit accumulation as a primary obstacle to homeownership.
Family financial support has become integral to property purchases across Britain
| PA"The growing reliance on family support risks deepening the inequality in the housing market," warned James Tatch from UK Finance.
The unprecedented nature of Newcastle's approach underscores the widening divide between those with access to familial wealth and those attempting to purchase homes through independent means.
Family financial support has become integral to property purchases across Britain.
Savills estate agency data indicates approximately 173,500 first-time purchasers received familial assistance last year, representing 52 per cent of all new buyers.
This support totalled £9.6billion, though the proportion receiving help decreased from 57 per cent in 2023.
The financial dynamics reveal striking disparities between assisted and independent buyers.
UK Finance statistics demonstrate that purchasers proceeding without parental backing earn considerably more, averaging £65,351 annually.
Those receiving family support typically earn £56,015, suggesting lower-income buyers increasingly depend on relatives to access property ownership.
The prevalence of parental assistance highlights how property acquisition has evolved beyond individual financial capacity, creating a two-tier system favouring those with affluent relatives.
Several competitors offer alternative pathways for deposit-challenged purchasers.
Leeds Building Society provides the market's lowest rate at 4.69 per cent
| PALeeds Building Society provides the market's lowest rate at 4.69 per cent for two-year fixed mortgages requiring five per cent deposits.
Yorkshire Building Society attracted approximately 1,200 first-time purchasers to its £5,000 minimum deposit scheme for properties valued up to £500,000.
Skipton Building Society extends £600,000 loans at 5.09 per cent fixed rates to applicants demonstrating consistent rental payments over twelve consecutive months.
April Mortgages offers deposit-free borrowing up to £600,000 for earners above £24,000, though rates begin at 6.29 per cent for decade-long commitments.
"Lenders have been pushing for more first-time buyer business, and not all of them are going to have a 10 or even a 5 per cent deposit, so they need a bit more help," Strutt observed.