These first-time buyers currently rent a local authority flat near East Kilbride, a "new town" about 5 miles from Glasgow.

Vicki, 29, is a council sports co-ordinator and Scottish junior badminton squad coach. Marco, 28, is an electrical engineer. Their joint income is �33,000 plus coaching fees which they do not wish to use in budgeting.

They have one personal loan finishing in 2005 and another which will be paid off in 10 months.

Marco is able to install kitchens, bathrooms and central heating so they are looking at houses in need of modernisation valued at around �50,000.

They have a 5% deposit but are having difficulty funding the renovation project.

Rob Clifford Mortgage Force

This is a classic situation for first-time buyers who find that the type of property they want is either too far beyond their price range, or in need of so much renovation they cannot finance the costs of borrowing and purchase.

The couple have saved a 5% minimum deposit. This should allow them to avoid a mortgage indemnity guarantee payment, the cost of which can be substantial.

But to borrow to fund the repairs may prove very expensive. There are lenders prepared to lend on the value of a renovated house and release funds on completion.

But Vicki and Marco plan to keep costs to a minimum by carrying out a lot of work themselves so they need funds in hand at the start, not the end.

Choosing a product and lender

I would recommend a fully flexible mortgage product with a built-in unsecured cash reserve that could take the total borrowing up to 125% of the property's value. Vicki and Marco estimate a requirement of 107%.

Some lenders may give around �500 help towards the renovation costs.

If Vicki and Marco have opened a joint current account to meet these costs, they should choose a lender who can link their account credits to the mortgage to reduce the interest payable.

The additional cost of the renovations should be lent at the mortgage rate over 25 years as an unsecured loan effectively providing borrowing within budgeted expenditure and at a realistic rate.

They should choose a mortgage with no redemption penalties, allowing renegotiation of the product with the lender when the renovation is complete or a change of lender if more competitive.

Warnings

Buying a property to "renovate" sounds like a great idea but may cost considerably more in the long run. Vicki and Marco must make sure they have accurately estimated the cost of renovation.

It is very common for even highly experienced homeowners to massively underestimate the expense of modernising a house.

Think carefully about your total monthly budget! Even though interest rates are currently low, clearly there is no guarantee this will remain.

Many first-time buyers think they can afford now, but must consider the consequences if interest rates increase, especially if their interest rate is not protected by a capped or fixed rate deal.

They should keep an eye on rates and ensure they do not continue to pay more than required.

How the government could help

Changes in legislation could help first-time buyers like Vicki and Marco in a number of ways: