What a problem someone who is trying to get on to the property ladder for the first time has these days!

Traditionally sky high property prices with the frightening mortgage costs these require, together with the almost impossible task of saving for a deposit which gets higher and higher anyway as property prices increase.  And now, when property prices have been falling and there seems to be a glimmer of hope for would be first time buyers, it's virtually impossible to get a mortgage!

With the high rent often paid and crippling credit card, loan and other costs all seeming to conspire against first time buyers - the situation is extraordinarily difficult.

However, the 'credit crunch' has brought one unexpected bonus to first time buyers - property prices have fallen dramaticaly in many parts of the country, and this has opened up the market considerably.  Whilst the problems of finding a good deposit remain, the lower mortgage required has made what was for long just a dream, a real possibility for some anxious to get on the property ladder where the first step has always been a long way off the ground!  Perhaps now is the opportunity many have been waiting for.

But there are still many obstacles to overcome as you head towards that property ladder!

 Briefly

Your status must be perfect - no late telephone bill payments, missed credit card dues and the like and these together with more major problems such as court judgements, defaults and the like will unforunately rule you out completely as things stand.  You need an absolute minimum of one year unblemished record before a lender will even CONSIDER an application at the moment.

You will need a large deposit! To get the very best products you will need a minimum deposit of 20 - 25 % of the purchase price!!! -  Yes, we know this is absolutely crazy but that's the way it is at the moment.  The lenders continue to be petrified at making a wrong move and are being ultra cautious. Yes, there a few mortgages available with just a 10% deposit  These are usually not competitive, are highly restrictive, and should be treated with caution, but sometimes might be worth considering if, for example, a 90% mortgage might be the means of obtaining a property at a highly competitive rate, and the 'profit' on such a purchase outweighs the 'loss' on the mortgage rate!  Recently some lenders have started introducing 85% mortgages to value requiring a 15% deposit and these are a little more competitive, but still far more expensive than available to borrowers with  20 or 25% deposit. In short - the larger the deposit, the better the product and interest rate!

Mortgage availability will be governed by your status, age, income,job stability and other factors which are churned into a mix by the lenders and come out as a 'credit score' This basically means that if you are over 21, have a steady job, not moved about too many times in the last 3 years, have the appropriate deposit, do not want to borrow the maximum allowable relative to your income  -  you at least have a chance of a mortgage!

 Here are a few practical suggestions which may help.

1. Can mum and/or dad or another close relative help in any way, either by actual cash to assist with a deposit, standing as guarantor if this is possible, or even using equity in their own property to help raise finance? 

2. Have you considered buying your first home jointly with others on a ‘shared purchase' basis? Such arrangements have to be considered carefully, but can sometimes be a positive way forward. The actual arrangements can be either a formal Housing Association shared equity type of mortgage or friends combining their income and resources to at least make a start on climbing that ladder!

3. Interest only mortgage to start? Especially in the early days, an interest only mortgage is something that could well be considered, but such mortgages are becoming very rare anyway as most lenders are nervous at not seeing the mortgage debt reducing.

WARNING! Many first time buyers may be tempted, in their desire to get on to the property ladder, to enter into arrangements which might on the surface appear to be the answer to their problems, but which have hidden dangers which may not have been adequately explained or understood.

IT IS IMPORTANT THAT FIRST TIME BUYERS IN PARTICULAR TAKE APPROPRIATE PROFESSIONAL ADVICE.