The bank has stopped accepting new applications for its Lend a Hand mortgage which allows a family member to deposit 10 per cent of the purchase price into a savings account linked to their child’s mortgage.
This was paying 2.94 per cent interest on the deposit before it was withdrawn.
Lloyds would then advance up to 100 per cent of the purchase price.
The move is a temporary decision made because of current economic uncertainty and to maintain service levels while demand for its mortgage deals remain high.
The removal of the deal is another blow for first-time buyers who have seen 95 per cent loan to value (LTV) deals disappear from the market.
Conditions on those deals which remain available have also become stricter.
Nationwide returned to the market in July with its 90 per cent LTV range exclusively for first-time buyers but said no more than 25 per cent of the deposit could be gifted by parents.
The Barclays Springboard mortgage, similar to the Lloyds deal, is still available.
Family Building Society brought back its 95 per cent LTV Family mortgage in June. Parents must hand over savings or have a charge on their property to guarantee the loan.