What are the options for a potential first-time buyer whose parents won’t hand over the inheritance early or who don’t have cash to lend? First, cut out overseas holidays, ditch the credit and store cards, stay in more and start saving — seriously. Scrape together just a 5% deposit — on a £132,000 property, that’s £6,600 — and a plethora of mortgages will be available.

If not, you will have to take out a 100% repayment mortgage. Interest rates will be a little higher but, if you hunt around, you can still get a good deal. Even better, get someone else to do the hunting for you: find an independent mortgage broker who doesn’t charge a fee and who can offer products not available on the high street.

An interest-only mortgage will reduce your monthly repayments, but Tanya Jackson, of the Yorkshire building society, does not recommend it because there is a risk you will never pay back your debt.

“It’s not a great idea,” Jackson says. “If they are thinking of doing this for a very short term, then it’s an option, but only if they take out an investment vehicle, too.”

A good compromise is HSBC’s HomeStart mortgage, which starts as interest-only and, after three years, makes a compulsory switch to capital and interest repayment. Or extend the term of a mortgage from a typical 25 years to 30, which will also cut down your monthly mortgage outgoings.

Why not buy with a friend? Although there are some potential pitfalls and you must take legal advice on how to structure it, this can be a great method, says David Hollingworth of L&C mortgage brokers. Britannia Building Society, for example, has a product aimed at four friends clubbing together that is only available through Graduate Network.

There are also various forms of shared ownership. Housing associations allow first-time buyers to buy a share of a property, and pay rent on the other half. Eligibility criteria vary from association to association, but they are particularly aimed at teachers, nurses, firemen and other key workers, whose low salaries make it often well-nigh impossible to afford to buy near where they work.

As your financial position improves, you can “staircase” up to full ownership.

There are plans to make such part-rent, part-buy schemes more broadly available. One lender, Advantage, is launching a mortgage that works on a similar principle but is open to all. It will let you borrow 15%-35% as a “residential ownership loan”, on which you pay only interest at a rate that it says will be less than 3%. In return, however, Advantage continues to own that slice of the property and will benefit from any capital gain.

Advantage, 0151 350 0500, www.afg.co.uk; Graduate Network, 0870 755 4118, www.sharetobuy.com; HSBC, 0800 169 6333, www.hsbc.co.uk; www.lcplc.co.uk

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