Many young people are priced-out of the housing market

The Bank of Ireland's First Start mortgage is believed to be the first loan of its kind, and will allow parents to take out a joint loan with their children.

The children will be able to borrow more money, but parents would be expected to contribute to monthly repayment costs - and are jointly liable for the loan.

The housing market is now beyond the reach of many first-time buyers, making it more common for parents to help their children with deposits, say mortgage experts.

Equally liable

The bank said it had launched the product because more parents were remortgaging to help their children get on the property ladder.

The parent needs to understand that they would have to pay the mortgage if the child defaulted David Hollingworth, London & Country

It will lend up to four times the parents' income, minus their own mortgage repayments, plus the child's income.

Assuming the parents have an income of �31,250 after paying for their own mortgage, the child on a �20,000 salary would be able to borrow up to �145,000 under the First Start mortgage.

The idea is to provide a top-up to young buyers who are unable to raise enough to buy a home under the usual system, that allows them to borrow four times their income.

For example, someone earning �20,000 who wanted to purchase a property valued at �120,000 would under existing rules be able to borrow four times income or �80,000. However, this would leave a deposit shortfall of �40,000.

A Council of Mortgage Lenders spokeswoman said: "It's clear that affordability is an issue in the current market for some buyers.

"We know that many parents wish to help their children get on to the housing ladder, and I don't think it's surprising to see innovation in this area on the part of lenders."

The Bank of Ireland loan is believed to be the first "parents" mortgage, but Scottish Widows bank does offer a graduate mortgage, in which parents can help their child borrow more money.

Unlike the Bank of Ireland loan, the parent guarantees only part of the loan.

While the loans are responses to market conditions, and have been welcomed by mortgage experts, some are urging caution.

"The parent and child have to understand the consequences," says David Hollingworth of London & Country, a mortgage broker.

"The parent needs to understand that they would have to pay the mortgage if the child defaulted."

Is this your worst nightmare? Have you been helped or are helping your child by their first home? Are you still priced-out of the housing market? Send in your comments, using the postform on the top right-hand side of the story:

Isn't it about time we reassessed this whole area as a nation. It's highly unlikely there will be a price correction, so changes to the concept of buying property has to be thought out. Take, for example, the Japenese market.
Howard, United Kingdom

It is about time that the unregulated Estate Agents were made to change theit tarrifs from a percentage of the property price to a flat rate for selling a property
Anonymous, UK

Instead of artificially maintaining house prices through schemes like this we should let the market adjust to what people can afford. If first-time buyers stop buying houses because of affordability then the market will have to adjust downwards to accommodate them.
Craig, Hampshire, UK

This is something I've been thinking about for months. However I lost my Dad two years ago I earn 20k and my Mum earns slightly less - what I'm trying to say is that this is only good for dual-income families. It just makes the rich/poor divide even bigger.
Russell , UK

I'm definately priced out and this doesn't help. I get the impression that it is just another attempt to prop up the housing market at unsustainble levels. With a record low of only 13% of new buyers being first timers in August, the vested interests will do anything to maintain (or increase further) current values. Given current debt levels in the country, this is a recipe for disaster. First timers should steer clear and wait, as the market will correct itself eventually.
martin, U.K.

Surely this will simply exacerbate the whole problem. I can foresee both parents and siblings ending up unable to service mounting debt with house prices climbing ever higher as a result.
Ken Ward, England

House prices are at historic highs and most experts (aside from those with vested interests, like estate agents) believe prices are going to fall significantly. To get both parents and their children in debt seems reckless at best. But ultimately its up to individuals to decide what is best for them. Personally I'm keeping my saving for when the property crash has completed (prices are falling already in London).
Mart, UK

Good idea, but you will need some very nice parents. If interest rate rise, prices drop and the child default the child can't go back to parents home as the they will lose it as well. So back to the grandparents home, I hope there's room!
Stephen, UK

This will just push prices further up the ladder even higher. A natural correction is now overdue, and increasing the borrowing power of first time buyers will only delay it, making the eventual outcome even worse.
Dean Smullen, England

Its amazing how short people's memories are. All sorts of schemes were devised in the late 80s to make mortgages affordable. It was simply an attempt by those with vested interests to prop up the housing market. I'm afraid there will be tears again this time when the market adjusts itself.
Suresh, UK

First time buyers opt out now! Without our custom the market will stall and prices be forced back to socially sustainable levels. You know this makes sense.
BS McIntosh, UK

FTB's should not be coaxed into entering today's overcooked market.Listen to the IMF, listen to your own common sense. The summer has made us feel good. Wait until the new year and the spiralling debt culture starts to bite the masses. It will crash like it did before and this time may take your parent's with it!
jonathan murray, united kingdom

There is an easy solution to the housing crisis, prevent people from buying many properties to let. The government is there to intervene in free markets when there is a problem. The government intervenes in the free markets to provide education, health, and now they shouldn't be scared to intervene in private property market.
Peter, UK

There is rarely ever a good time to be a first-time buyer - I bought my first house in June 1988 when I got married and we all remember what happened to interest rates and house prices thereafter. Parents have historically always helped out with buying property for their children - at least for the lucky few! But remortgaging brings new risks that no one is really facing up to - this is equity release by another name with no certainty that the house market will sustain the amount released. Parents beware!
Stuart , uk

When you see articles like this, you know it's time to sell any real estate holdings and start renting. It's yet still another sign that we are at the peak of the real estate bubble.
Bob A Bowie, USA