According to recent research, many young first time buyers wanting to take advantage of the lower property prices at the moment are taking loans to fund their deposit.

The study was completed by and shows that 13 per cent of 18-34 year olds are looking at buying their first property over the next twelve months but 16 per cent of them are looking at loans to fund their down payment.

Only 25 per cent of the prospective first time buyers already have savings for their deposit.

Other figures from the CML (Council of Mortgage Lenders) have shown the average deposit from first time buyers is £32,000 at the moment.

Those that do not yet have enough for a down payment are split into 29 per cent intend to rent whilst they save, 14 per cent are hoping property prices will drop further and 6 per cent are banking on the return of 100 per cent mortgages.

Louise Cuming, head of mortgages at, said: “Taking out a loan to pay for a mortgage deposit is a dangerous move, and must be avoided even if it means you have to delay buying your first home. Anyone who takes a loan is effectively taking out a 100% mortgage through the back door. Not only will the mortgage lender decline the application if it discovers this is the source of the deposit, but it is also a huge risk to the borrower – your monthly outgoings will be higher which means there is a greater chance of you finding yourself unable to keep up with repayments.”

First time buyers have been hit hard by the credit crunch as there are few mortgages available now for those with just a 10 per cent deposit and much less choice for those with less than a 25 per cent deposit.

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