First-time buyers are being offered a helping hand onto the property ladder through a new government scheme.
The NewBuy Guarantee scheme was launched this month with the aim of helping prospective buyers on the property ladder and building thousands of new homes.
It allows buyers to purchase houses with a 5 per cent deposit, instead of the 20 per cent deposit common in today's mortgage market.
So first-time buyers will be able to take out much larger loans than they would normally be able to - up to 95 per cent loan-to-value (LTV).
On a £200,000 property, buyers will be able to purchase with a deposit of just £10,000.
The government and housing developers have agreed to foot some of the bill if the buyer defaults or ends up in negative equity.
Who is offering NewBuy?
A handful of high street lenders including Barclays, NatWest and Nationwide have already signed up to NewBuy.
Santander and Halifax are set to unveil mortgage deals soon and several major house-builders have also come on board.
For example, NatWest is offering a two-year fixed mortgage at 4.29 per cent and a five-year fix at 4.99 per cent.
Nationwide is offering a three-year fix at 5.69 per cent, and a five-year fix at 5.99 per cent.
NewBuy won’t be the right answer for everyone as there is a limited choice of lender and it is only available on new-build properties.
There are also concerns about first-time buyers taking out a high LTV mortgage on a new-build home.
As if house prices fall further, they could end up in negative equity – where the mortgage is bigger than the value of their home.
Further, the scheme is only set to help 100,000 people, and is only available in England.
Schemes across the UK
Separate schemes are under consideration in Scotland and Wales, according to David Hollingworth from mortgage broker London & Country.
"Scotland, for example, has the Low-cost Initiative for First Time Buyers (LIFT) scheme which includes a new-build shared equity scheme."
Wales has a number of shared ownership or "part rent, part buy" schemes, in particular offering first-time buyers and key workers the opportunity to get on the housing ladder.
There are also co-ownership schemes available in Northern Ireland.
Other home ownership alternatives
There are also alternative routes to home ownership available right across the UK, such as guarantor schemes which are now offered by a host of lenders.
"Aldermore Bank can offer 100 per cent LTV if a family member can offer equity in their property as additional security," says Hollingworth.
"Borrowers can get a rate of 5.98 per cent on a two or three-year fix with a £1,298 fee."
Bath and National Counties building societies also offer a similar structure for mortgages up to 95 per cent LTV.
Elsewhere, Lloyds TSB offers the Lend a Hand scheme, where parents put money into a Lloyds saving bond as security.
Higher LTV deals
Equally, in recent months, a growing band of lenders have begun offering mortgage deals at higher LTVs.
What's more, these are available to borrowers in England, Wales and Scotland without having to go through a government scheme.
"Newcastle building society has a two-year fix at 5.95 per cent with £995 fee and Skipton building society has a five year fix at 6.29 per cent with a £195 fee," says Hollingworth.
"Both of these are available up to 95 per cent LTV."
Monmouthshire building society also offers mortgages at 95 per cent LTV just for homebuyers in Wales.
"These mortgages are only available to customers who live in the NP, CF, SA, LD, WR, GL, HR and BS postcode areas," says Hollingworth.
Even so, as a first-time buyer, your focus should still be on saving up the biggest deposit you can.
"A bigger deposit will give you access to better rates, and will also act as a buffer against any fall in house prices," says Hollingworth.
"If you can save a 25 per cent deposit, you could get a five-year fix at 3.29 per cent from the Chelsea building society. This comes with a £1,495 fee."