Three-quarters of the answer

Three-quarters of the answer

But in recent weeks, many developers have started offering their own "shared equity" schemes that allow people to buy a new home without having to pay the full purchase price up front. In many cases, the firms say, this means an individual can own 100% of their new home for as little as 75% of the price, making it easier for hard-pressed buyers to get a foothold on the property ladder.

Barratt Homes, Fairview New Homes and Countryside Properties are just some of the firms that have launched schemes recently, and this week they were joined by Miller Homes. But how do they work? What's the catch? And do you have to be a key public sector worker to take advantage of them?

The answer to the last question is no - though it is not surprising that some people assume this to be the case. The schemes seem to be modelled on state-backed initiatives aimed at helping teachers, nurses and the like on to the housing ladder, but actually have nothing to do with the government or housing associations - they are simply another type of incentive offered by housebuilders. Many.....continued below

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The schemes have different names ("Jumpstart", "Helping Hand Plus", "Flying Start" etc) but broadly work in the same way: you find the home you want to buy and pay a set percentage of the price upfront, with the balance funded by a loan from the developer which is often interest-free for up to 10 years. Most firms let you pay 75% initially, though with some, including Barratt and Persimmon, you pay 85% upfront. Only having to fork out 75% means, for example, that the initial cost of a £220,000 house would be £165,000.

Let's assume you are buying a £220,000 home from a developer offering a 75% scheme. You take out a mortgage as normal for the main part of the purchase price - £165,000. The housebuilder then provides the remaining £55,000 (the other 25%) via a second loan. There is usually no rent or interest to pay on this second loan for at least five years. With some companies, including Bovis and Countryside, you pay a lowish interest (perhaps 3%) during years five to 10, but with many others you don't.

One plus point is that mortgage rates for people borrowing 75% of their property's value tend to be more attractive and easier to get hold of, says Philip Hogg at Miller Homes.

Buyers can choose to pay off all or part of the developer's loan during the 10-year period. The payments you make will be based on your home's "open market value" at the time. Equally, you can sell the property at any time and retain your share of the selling price, while the developer will be entitled to 25% (or whatever its share is at that point) of the open market value at that time.