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First-time mortgage holders despair of house prices

Date: Fri, 12 Nov 04 Analysis

As many as 93 per cent of first-time buyers despair of buying a property due to surging house prices.

Research from FirstRungNow.com finds that affordability is the principal reason property hunters are unable to buy, and the majority of people believe that this will not change in the coming months.

"This is a very difficult and confusing time for people feeling trapped into a rental situation - for the first time for many years, there is uncertainty about whether it is a good time to invest in property," commented Helen Adams, director of FirstRungNow.

"With so many views on what the market will do there is a great deal of confusion all round. On the other hand, our research shows that it is well understood that paying a year's rent could easily be more of a loss than any dip in value of a property and that investing in your home is a long term project," she added.

FirstRungNow points to two options open to would-be first-time buyers.

The first is shared ownership, or buying in conjunction with a housing association or housing trust.

Taking this option let the purchase buy a home which is typically recently developed or refurbished in conjunction with a housing organisation. This type of scheme is popular among key workers and people unable to put together a deposit as 100% mortgages are often allowed.

To become eligible for a shared ownership scheme people must first apply to a local housing corporation and get onto a list.

Rent is paid for the part of the property not owned by the individual at the outset, but the property can eventually become theirs.

The second option is joint ownership, or buying with a friend. Recent figures reveal that more than one in ten first-time buyers are currently cooperating with friends to pay for their first home.

FirstRungNow points out that joint ownership lets people share the cost of any deposit, purchasing fees and ongoing mortgage payments.

In this instance the owners become tenants in common and need a trust deed formalising the share of ownership at purchase and a cohabitation agreement outlining how cohabitees will live together and the basis of the splitting of finances when they come to sell up or if somebody wants to move on.

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