Home in on a Mortgage; Five Steps to Get First-Time Buyers on the First Rung of the Property Ladder.

The average income of first-time purchasers jumped to pounds 18,503 in April, the highest level ever, according to figures published by the Halifax last week.

These new buyers are also having to borrow at record levels, taking on an average pounds 52,846 mortgage debt to fulfil their home-owning dream.

And while average house prices are rising by 3.7 per cent, first-time buyer home prices are rising even faster, by four per cent in April to pounds 53,874.

Yet the rising costs are not deterring first-time buyers, who are joining the property-owning ranks in record numbers.

Much of the impetus to buy rather than rent is due to the 30-year low in mortgage rates, which makes it cheaper to buy a house than rent. Over 25 years the cost of buying is on average pounds 149,000 less than paying rent, according to the Abbey National.

No wonder the number of people wanting to become homeowners is back to record highs last seen in the property boom of the late 1980s.

There is only one snag. While 80 per cent of us want to be owner-occupiers, many of those who have yet to climb on to the first rung of the ladder simply can't afford to.

Four in ten 25 to 34 year-olds do not yet own their own homes and among the under-25s three in four are not on the property ladder. Many fear that if they don't buy soon,they will never be able to become homeowners as prices rise faster than their earnings.

There are five commonly-quoted- obstacles putting people off, but today we show ways around them.

I'VE GOT NO DEPOSIT: That's solved by the return of the 100 per cent mortgage. It became almost extinct after the end of the late Eighties boom when it was blamed for millions of cases of negative equity - a home being worth less than the mortgage, due to a fall in prices. But, with experts predicting property price rises of four per cent this year, negative equity is less of a risk today.

The other option is to buy from a housebuilder, such as Barratt and Fairview, who offers "deposit-paid"deals.

BEST 100 per cent mortgages: Sainsbury's Bank 5.95 per cent, fixed to 31.5.2004; Royal Bank of Scotland, 6.05 per cent fixed to 18.6.2001; The Mortgage Business, 6.35 per cent fixed to 1.7.2003; Bristol & West, 6.49 per cent fixed to 1.4.2004; Verso, 6.58 per cent fixed to 1.2.2004; Clydesdale, 6.7 per cent variable; Verso, 6.93 per cent variable; Abbey National, 6.95 per cent variable; Legal & General, bank 6.99 per cent fixed to 28.2.2004; Bank of Scotland, 6.99 per cent variable.

I DON'T EARN ENOUGH: Shared ownership schemes, operated by housing associations, enable you to buy part of the property and rent the rest. If you can afford to buy some or all of the rented share later on, you can do so. If you can't, when you come to sell, you will still get back your share of any profits. Each year around 2,000 homes are bought this way.

FOR details, contact a housing association or your local office of the Housing Corporation.

I DON'T HAVE A LONG-TERM JOB CONTRACT: One in ten workers are on temporary contracts while four million are self-employed. In the past they could not get a mortgage but today lenders offer two main types. Self-certification mortgages require details of your income but you do not have to provide any proof. Non-status mortgages require no income details at all. In both cases a deposit of 20 to 25 per cent is usually required.

BAD CREDIT HISTORY: In the past, being taken to court over a bad debt would bar you from getting a home loan. But in minor debt cases, you should still be able to get a mortgage if you have cleared the arrears. Arrears on an earlier home loan can be more of a problem. But if you can prove they were beyond your control - for example, run up by your spouse - you may be in the clear.

LENDERS who consider minor debt cases include: Abbey National, Barclays, Birmingham Midshires, Bradford and Bingley, Bristol & West, Household Nationwide and Woolwich Direct.

NEGATIVE EQUITY PROBLEMS: If you owe more on your existing home than it is worth, a negative equity loan can lend you up to 130 per cent of the value of your new home. So if your home is worth pounds 100,000 you can borrow pounds 130,000 for your next property.

NEGATIVE equity home loans: Mortgage Express, maximum advance: 130 per cent; Barclays Bank, 125 per cent; Cheltenham & Gloucester, 125 per cent; Bank of Scotland, 120 per cent.

...AND HERE'S HOW WE DID IT

I'm so happy with my no-deposit deal

HELEN Marshall was fed up renting flats or living with her parents but could not afford to save for a deposit on a home of her own.

Then Helen, 22, of Benfleet, Essex, saw an ad in her local paper saying Barratt were building a development in nearby Grays and were offering to give buyers their cash deposit.

"I thought it would be the only way I could afford to buy a place," says Helen. "I was paying about pounds 400 in rent a month plus pounds 100 in bills. Landlords can charge ridiculous rents and at the end of the day the place isn't yours and so it isn't an investment. I made an appointment with Barratt and found out they pay your five per cent deposit. I moved into my house six weeks later.

"They also paid my legal fees and for the survey, so my outlay was only pounds 500."

The one-bedroom house cost pounds 51,995 including a fitted kitchen, bathroom, curtains and carpets.

"I'm so happy," says Helen. "I've got my own space and my independence. It's lovely."

WE'RE BUYING HALF OUR HOUSE

LORRY driver Ronnie Copas, 33, was fed up with the flat in Barking, East London, that was his home with wife Denise, 31, and their two childen. Then they heard about the Boleyn & Forest Housing Society scheme in Dagenham, Essex.

Now the couple are buying half of a pounds 83,750 three-bedroom house with a Portman Endowment mortgage and renting the rest. "We couldn't afford to buy outright without struggling. We want to buy a further 10 per cent stake next year, to reduce the rent," says Ronnie.

Going shares helped us land our dream flat

NICK and Alison Dimitrakopoulos also got on the housing ladder through shared ownership.

The couple had moved house about 10 times in five years and were sick of renting.

"I had to have curtains to match every shade of carpet," says beauty consultant Alison, 32.

The couple had set their hearts on living in Crouch End, North London, but found it hard to save for a deposit.

"We were paying about pounds 700 a month in rent," explains Nick, 48, a musician. Then Alison noticed a small block of flats being refurbished as a Metropolitan Home Ownership development.

"We had an interview and when I found we'd been successful I dropped the phone - I was so happy," says Alison.

"It's a one-bedroom flat worth pounds 80,000 and we have a 50 per cent share in it.

"We have a 10-year, fixed-rate mortgage with Britannia. We haven't thought about taking a bigger stake yet, as we want to try to get a two-bedroom flat next."

Source: Sunday Mirror