Research by the Alliance & Leicester reveals that nearly half of all parents fork out around £18,000 to help their children buy their first homes.

As prices continue to rise, it is no wonder first-time buyers are looking for extra funding from their parents to get on the housing ladder. That crucial first rung of the property ladder is slipping further and further out of reach for many first-time buyers.

The average house price trebled to £180,000 in the last decade, so it is not surprising that the average age of a first-time buyer has risen to a mature 34 compared with 29 in 1974, according to the Halifax.

A typical first-time buyer with a salary of £36,000 could be searching for a mortgage of £145,000 at four times their salary. This means that at average first-time buyer rates of around five per cent, they could be committing £850 a month, nearly 40 per cent of take-home pay, to mortgage repayments.

Young people in the 50 most expensive parts of Britain, including London and parts of the South-East, need five or six times their annual salary to afford a two-bedroom property.

The Government is trying to help first-timers with its HomeBuy programme, which requires developers to subsidise first-time buyers. And recently the Conservatives launched a "rent-to-buy" scheme which would allow council tenants to convert rent into a mortgage. "There is a huge gap between those who own a home and those who can't see how they are going to be able to achieve that dream," David Cameron said.

There are, however, a number of ways to get on to the property ladder for the first time - but which is the right one for you? We survey some of the options.

Incentives to buy
Apart from getting the best mortgage deals, many ingenious first-timers are finding other ways to get on to the ladder. They stay ahead of the game by checking out incentives that help them to compete with investors. Some developers are touting to first-timers for trade, typically offering to pay half the deposit, the stamp duty, legal costs and extras like carpets, appliances and landscaped gardens. However, developers buy in extras such as carpets as a job lot - so don't expect great quality.

If you buy off-plan or at the "fag end" of a scheme you may get more for your money, as builders are more likely to throw in extras when they arrive or when they're eager to get off site.

Usually the earlier you buy the better because it gives house builders certainty. And it puts you in a stronger position to bargain for a better kitchen or wood flooring. Canny buyers negotiate hard and try to get whatever they can. It could be a good time to try to upgrade the kitchen, ask for better tiles in the bathroom or see if you can get a free parking place - anything that doesn't knock down the price as advertised. Typically developers don't want to lower the headline price, as this upsets their bankers, so they give incentives that don't actually appear to be cutting the price.

What are the potential pitfalls?
The more "optional" extras thrown in, the less you will be able to negotiate the price. Beware of any deal that involves committing to a developer's own financial products. Beware too of offers to "arrange your mortgage free" or give you cashback - there may be a sting in the tail, in the form of higher interest rates and redemption penalties.

Buying with a friend
There has been a 25 per cent increase in the number of friends becoming joint property owners over the last 12 months, according to developer Linden Homes, with this group now making up almost a third of all first-time buyer purchases.

Shared ownership
Gordon Brown lifted the stamp duty threshold from £120,000 to £125,000 this year to help first-timers, as well as introducing the HomeBuy scheme. There are three parts: New Build HomeBuy, in which you share ownership of your home with a housing association; Open Market HomeBuy, in which you part-buy a property and get a loan from a housing association for the rest; and Social HomeBuy, in which housing association and local authority tenants are helped to buy their current home.

The new build scheme is part of the National Affordable Housing Programme, which aims to build 35,000 homes over the next two years. Affordable homes are no longer the poor relatives of the private sector.

Under the shared ownership scheme, a first-timer can take out a mortgage on a portion of the property, typically 25 per cent, with a housing association leasing them the rest. When they have more money, they can buy larger shares until they own it outright. When it comes to sell, the housing association has first option to buy at the market rate.

What are the potential pitfalls?
Mortgages taken out by first-time buyers under the HomeBuy scheme can cost more than traditional home loans, and the number of lenders in the scheme is limited.

Even in a limited marketplace, its worth shopping around for the best deal; make lenders compete for business. It's a long-term contract with a lot of money at stake.

You will still need a survey and mortgage valuation to ensure the property is fit to buy.

Your home may be repossessed if you do not keep up repayments on your mortgage.
Article date: 10.06