Get on the property ladder by the end of the year

If you're not on the property ladder yet, the statistics make for sobering reading. A recent study revealed that 27% of people have given up getting on the property ladder entirely - with over half saying they could never dream of raising the cash for a deposit.

It's easy to be dispirited - particularly at a time of rising house prices - and just resign ourselves to the vagaries of private rental for life. However, buying your own home is not beyond the realms of possibility - and there's a chance you could afford to get on the property ladder by the end of the year.

1. Compromise

Nobody is going to love the fact that compromise is the first step, but it's going to make every other step possible. There are a large number of compromises to consider: you can revisit the size of property you can live with, you can be flexible on the condition of the property, and perhaps most importantly you can rethink the area in which you're prepared to consider living.

You only have to look at the London market to see the impact of this kind of compromise: if you want a two bedroom flat and you're keen to live no further out than Balham, for example, you'll need £550,000 to get on the property ladder. If, however, you're willing to consider a commute to Haywards Heath, you could get the same flat for around half the price. If you can bring down the target price, it makes getting on the property ladder far more attainable.

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2. Work out the absolute maximum you can afford to save each month

This needs to be realistic, but it also needs to be stringent. You're not signing up to this kind of rigorous budgeting for life - just for the next year - so you can cut out all sorts of discretionary spending - like new clothes and gong out - on the grounds that it's a short-term lifestyle sacrifice for a long-term gain. There will be some people who are able to save through this approach alone. However, they are likely to be a very driven individual with plans to buy somewhere highly affordable.

For everyone else, this isn't going to solve your deposit issues. At the moment the average first time buyer property costs £171,870. However, this went up 9% last year, so you'll need to build in similar growth this year too, and aim for £187,000. In theory you only need 5% of this for your deposit, but to get an affordable mortgage rate, you'll need 10% - which works out as £18,700.

If you want to buy this time next year, you'll need to put aside an incredible £1,539 a month. For the vast majority of people, this is far too much, so they'll need extra help.

3. Check for government help

If you can get your hands on a 5% deposit, there are schemes and deals to help you. The government's Help to Buy scheme could prove useful. There's an equity loan option if you buy a new-build. Under this scheme you put down a 5% deposit, the government gives you a 20% loan, and you borrow 75% from a mortgage lender. You won't be charged anything on the 20% loan for the first five years of the mortgage - to give you a chance to get your finances in order, and then you'll pay a competitive rate of interest on it all.

You'll have to meet strict lending criteria to prove you can afford it, but if you pass, it could mean you only need to raise a 5% deposit. If you're not buying a new home, then you can still take advantage of the Help to Buy mortgage guarantee scheme, which should make it easier for you to get a 95% mortgage from lenders. Assuming you are going for the average first time buyer property, this will leave you to save £9,350 during the year.

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4. Ask family

If you are unable to save this, then you may need to turn to your family. In around two thirds of cases, first time buyers have some help from their family in getting their first step on the housing ladder. Some families will help save towards the deposit during the year, while others use savings, remortgage or use equity release to free up a lump sum.

For those who don't have the cash to spare, there are still options, such as acting as a guarantor for the mortgage or using family mortgages to take on some of the responsibility for repayment.

All these options have implications for your family's own finances, so it's vital that everyone understands the risks before they offer to help out.

5. New build home deals

It's worth checking with construction companies whether they have a deal that suit you. Many of them have a number of offerings for first time buyers - to reduce or even eliminate the need for a deposit. Often this help comes in the form of a loan - sometimes interest-free - for a large enough deposit to enable you to get a mortgage.

They may, for example, offer to lend you 20% of the value of the property for ten years, and not charge you a penny in interest. Of course, this comes with a huge caveat. At the end of the loan period you're going to need to be able to pay it off, so you'll need to have a sensible financial plan in place to repay the loan.

6. Shared ownership

If all of this is still too much of a stretch, there are shared ownership arrangements which may suit you. These are provided by housing associations and local authorities, and allow you to buy anywhere between 25% and 75% of the property, and pay rent on the rest. You can then buy more of a share in the property if you can afford it at a later date.

To use a scheme like this you will have to meet the specific criteria of the housing association you want to buy from. You will also need to secure a mortgage on the portion you want to buy (unless you have the savings handy). However, the size of the deposit you need will shrink dramatically.

There's no one right answer to getting on the property ladder. The best approach will depend entirely on the circumstances each would-be buyer faces. Choosing the best one for you requires a full understanding of all the options, and in some cases it's best to get help from a professional adviser to make sure you appreciate all the implications.

However, this list should give you hope. If you are committed to the plan, willing to make sacrifices and compromises, and ask for help, then you could be on the property ladder by the end of the year.

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