First time buyers are finding it harder to purchase a property than at any time in the past quarter of a century, Clear Property Investment has learned.

Figures revealed by the Nationwide Building Society show that with the average home costing £142,457 - more than four and a half times the average UK salary - those wishing to get on the property ladder are having to save for much bigger deposits and borrow far more cash. And with no 100 per cent mortgages around, for many their dream of buying a home remains just that - a dream. This doesn't bode well for the property market where first-time buyers make up 40 per cent of the total.

"Unless borrowers have help from the 'bank of mum and dad' finding a deposit of even 10 per cent can be a struggle," said Melanie Bien, director of mortgage broker Private Finance, speaking in the Daily Express newspaper.

So what options are available to first-time buyers? Well, these include:

Guarantor loans
Buying with friends
Shared-equity schemes
Interest-only loans

In the case of Guarantor Loans this usually comes in the form of parental support. However, even this is proving difficult as the majority of lenders want to be convinced the guarantor himself will be able to pay back what is borrowed.

Buying with friends makes sense as it results in a better mortgage rate. Legally, friends can take out a "tenant in common" document which shows how much each has individually contributed.

Shared Equity Schemes involve taking out a mortgage on a particular percentage of the property with a Housing Association owning the remainder. Interest holidays can be an option here and the loan tends to be payable as a proportion of the selling price.

With interest-only loans the property tends to be more expensive in the long-run and new rules are currently being introduced which will dictate that loans will only be available with a valid repayment strategy. Northern Rock and Lloyds TSB are particularly strict on this issue.

Meanwhile, tougher credit scoring is also an issue for the first-time buyer, particularly when looking for an interest-only loan. Clean credit ratings are crucial so that in many cases, even if the potential borrower can come up with the deposit, the loan may be rejected on the basis of doubt over repayments. It appears that even reducing the stamp duty threshold has had little, or no effect, on the general situation.

For advice on property investment call any of our Clear Property Investment offices situated throughout Scotland.

View other news from August 2010