Relatives should assist each other to buy property

"The first hurdle to overcome is to prove to the mortgage lenders that they are credit worthy - but often it is even more difficult for young people to raise the 10% to 20% deposit required and to find money to pay the transfer fees. This has proved an insurmountable barrier for many."

In previous times it was accepted that parents, relatives or friends would often step into the breach and help young people to become home owners. However in today's more selfish and materialistic world, family ties have been weakened and this type of help is not given as readily as before.

Three avenues

Urging parents and relatives to seriously consider giving assistance to younger people, Clarke says that there are at least three avenues are open to them: they can lend the young person the cash for the deposit and the transfer costs, or they can sign on with the bank as joint owners and joint bond applicants. The banks are not averse to this type of agreement, as it has generally worked well for them. Alternatively, they can sign with the bank to stand surety for the loan.

"Deals of this kind," says Clarke, "need not be risky because, firstly, the interest rate can be above average and, secondly, the agreement can include a clause which allows the lender or partner to take ownership of the property - often without compensation - if the borrower or partner defaults on his monthly payments. In these situations, the defaulter can sometimes become a tenant."