With yearly house price inflation increasing, lenders are creating a new breed of products to help the first-time buyer get that all-important first mortgage.

For years, many prospective purchasers have been biding their time, in the hope that the rising market would run out of steam. But their patience has not been rewarded; recently the Department for the Communities and Local Government said that the cost of the average home in England has doubled to £202,000 in the past four years.

It is not surprising then that first-time buyers are increasingly stretching themselves to get on the property ladder. First-time buyer income multiples reached record levels in July this year at 3.24 per cent of the average income, figures from the Council of Mortgage Lenders reveal.

Some help is now at hand. The Government initiative for key workers - shared-ownership mortgages - offers a way for lower earners to buy a property that would normally be beyond their means. Under the state-backed scheme, approved lenders will offer deals where certain public-sector workers will be offered a normal mortgage for 75 per cent of their home and get an interest-free loan (split equally between the lender and the Government) for the remaining 25 per cent.

For a £150,000 property, purchasers will be paying about £700 a month rather than the £900 they would be paying if they were buying it outright – but they will miss out on a quarter of any increase in the value of the property.

If you do not qualify for the state scheme, help could also be at hand with a new raft of products hitting the market.

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