Stratospheric house price increases over the last year may have had some homeowners rubbing their hands in glee, but that’s not the case for first-time buyers.

With an average increase of £23,600 since June 2020 according to Halifax data, many are finding that the home ownership dream is running away from them – especially as price growth is out of kilter with wages.

For those that do not have high salaries, or families with large sums of cash to gift them, raising a deposit is often one of the biggest challenges.

The financial sector has recognised this and cooked up a series of products to help first-time buyers get together that crucial lump sum, but what are they and is taking one a wise move? 

Deposit lending schemes can help first-time buyers raise enough money to purchase their home – but they can also come with hefty interest charges 

Deposits matter, as they get you a better mortgage rate and protect you from negative equity. 

‘For anyone looking to purchase their first home the more savings they have to put down as a deposit the better, as the lower the loan-to-value ratio, the lower the interest rate, and the lower the risk of negative equity,’ says Katie Brain, consumer banking expert at financial information business Defaqto. 

‘But with house prices at a high level it can be very difficult for people to save enough, especially if they are also paying for rent or live on their own.

‘Thankfully there are various mortgage and government schemes to help…

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