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First Time Buyer

Newcastle Building Society gives first-time buyers £2k cash boost

Paloma Kubiak
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Paloma Kubiak

Newcastle Building Society is offering a £2,000 deposit contribution to first-time buyers saving into its cash Lifetime ISA.

First-time buyers saving in the Newcastle Building Society’s cash Lifetime ISA can take out its Deposit Booster mortgage which offers £2,000 towards their deposit.

This is on top of the 25% government bonus given to eligible Lifetime ISA account holders who use the funds to get on the property ladder. See YourMoney.com’s Lifetime ISA guide for more information on the savings scheme.

The Deposit Booster mortgage is available to homebuyers with a 5% deposit, including the cash from The Newcastle. Savers can choose to take out a two-year fixed deal with a rate of 3.25% or a five-year deal at 3.39%.

For example, a first-time buyer purchasing a £177,000 property would need a 5% (£8,850) deposit.

The saver would need to stump up just £5,480 cash from their Lifetime ISA, which would attract the 25% government bonus (£1,370) and they’d also get the £2,000 contribution from The Newcastle.

The £2,000 deposit contribution is paid on completion together with the mortgage funds. It’s available to existing customers and to those who transfer their Lifetime ISA to The Newcastle from other providers.

A couple buying their first home together who both have a Lifetime ISA with The Newcastle will only be eligible for one £2,000 deposit as the deal is per mortgage, not per person.

Customers who have been saving into a Lifetime ISA for less than the minimum 12 month period can apply for the Deposit Booster mortgage. However, they won’t be eligible for the government’s 25% bonus and withdrawals before 12 months are subject to a 25% penalty on the whole amount.

Stuart Miller, customer director of Newcastle Building Society, said: “Following the launch of our Lifetime ISA in 2018, we’ve been looking at a variety of ways to help those saving for their first home. We understand from research we’ve conducted with our Lifetime ISA customers, that one of the main barriers they’re facing is building their deposit.

“That’s why we’re delighted to introduce our Deposit Booster mortgage. This gives our Lifetime ISA customers an extra £2,000, on top of the 25% government bonus, giving a boost to their deposit.”

The building society has 33,000 Lifetime ISA customers and also offers alternative mortgage products for these customers, not just the Deposit Booster mortgage.

Is it worth taking out Newcastle’s Deposit Booster mortgage?

The average two-year fixed rate deal at 95% LTV comes in at 3.24% according to financial data site Moneyfacts, a fraction less than The Newcastle’s rate. And for a five-year fix at 95% LTV, the average deal comes in at 3.55%, pricier than the building society’s offering.

Darren Cook of Moneyfacts, said: “Saving for a deposit seems to be the biggest obstacle potential first-time buyers need to overcome, so any incentives that make it a little easier must be good news for some new home buyers.

“The two-year and five-year mortgage deals are not necessarily market-leading rates, however, both deals have no product fees attached, which helps a first-time buyer with upfront costs with the added feature of £2,000 towards a deposit.”

The table below illustrates the savings customers could make with a £2,000 deposit contribution: