The new scheme is called HomeBuy Direct. This plan is aimed at helping first time buyers with a household income of less than £60,000. These first time buyers will be offered the chance of having a 5 year interest ‘free’ loan, borrowing up to 30% on a new property. After the initial five year ‘free’ period these first time buyers will have to pay a fee, of which no details have yet been released.

Property developers have gotten involved in the HomeBuy Direct scheme, hoping that this will keep the house building industry afloat in these difficult times. Whilst the government sees this as a positive move in helping first time buyers to get into the property market. However, this could be argued that, with the housing market in freefall, it would be the worst time possible for anyone to get sucked into negative equity, especially vulnerable first time buyers.

Who decides on the 10,000 people that get the HomeBuy Direct offer? As I am sure there are more than 10,000 first time buyers out there earning less than £60,000. What are the fees that are going to be charged after the end of the five year deal? Would the millions allocated to this plan be wiser spent on helping the current homeowners who are already struggling to make their mortgage payments, instead of encouraging more people to get into a similar situation. Are the government and the renowned greedy property developers really the caped crusaders who have the answer that we’ve been looking for?

A cynical person might say that anything that says ‘free’ usually has a catch, you know the old saying, if it seems to good to be true it usually is! Only time will tell.

Re-mortgaging has become a very popular option over recent years. There are a few good reasons for re-mortgaging, the main one being if a different mortgage lender is offering a better interest rate than what you are currently getting.

As long as you have not got any tie in period with your current lender it is possible to save a lot of money by re mortgaging your property. By saving money this way you may also be able to afford to reduce the term of your mortgage.

Another reason for re- mortgaging your home either with your existing lender or with a new lender is to raise some capital. This could be because you want to make some improvements on your property, like an extension or you may want to consolidate your existing debt like credit cards, loans and store cards.

Most people who are looking to re- mortgage their property are in a strong position as there are many lenders clambering over themselves to gain you as a new customer, offering some very good deals.

Again remember to read all small print to ensure you are getting the best deal for you long term.

The term of which you can decide, for example 25 years and the monthly repayments are a fixed amount and you know at the end of that period you will not owe a penny.

Usually a lender will offer an initial low fixed interest rate for say the first three years and then it changes to another fixed interest rate for the next 22 years, which makes budgeting for your mortgage very easy.

The downside to this type of mortgage is that the mortgage period will never be shorter than the initial set period. Also if the banks base rate drops exceptionally low within the 25 years, you will not benefit from this.

The initial low fixed interest rate of say three years also ties you to that mortgage, which is not a problem unless you want to move within that time and arrange a new mortgage. If this is at all likely it is best to get a mortgage without this initial fixed rate, as it can be very costly with the penalty charges involved.

In these circumstances you also would not have benefited from paying off any of your mortgage amount as in the initial years of the mortgage your monthly repayments are paying towards the interest owed alone and not towards the mortgage amount.

This means that at the end of your mortgage period, again of which is up to you, all you will have paid off is the interest amount on the mortgage, you will still be left with the amount you borrowed in the first place owed to the lender.

You therefore have to arrange a long term investment plan to cover this when your mortgage period expires. The up side to this is that if you invest wisely there is always the possibility that you could pay your mortgage off early and have a lump sum for yourself.

The down side is that you are in the hands of which ever investment you have decided to use. If the market slumps so does your investment, which means at the end of the mortgage period you may be short of the balance owed.

There are three main types of investment plans available, the main one tends to be the endowment policy, which has built in life assurance. This is where a life insurance company invests your money for you into a savings plan.

The other popular choices are the individual savings policy, known as an ISA and the pension plan. With both these plans your money is invested into the stock market and your gains are tax fee. These types of mortgage plans are obviously a lot riskier than the repayment mortgage, but the benefits can be huge if your investment selection pays off.

This is why you need to research both options carefully to decide on the best type of mortgage for you.

What is a shared equity mortgage?

Basically it will work along these lines. You as the property buyer will put up between 50-75% of the price of the property. The rest of the equity will be split between the Government and the mortgage lender, who become co-owners in the property. You would have to pay a small ‘rent’ of around 3% on the part you don’t own.

You can increase your stake in the property as and when your financial circumstances improve. If you decide to sell any gains would be split between yourself and your co-owners.

What are the benefits of a shared equity mortgage?

* As a first time buyer it allows you to get a foot on the property ladder, where previously it would have been too costly.

* The repayments would be a lot lower than on a full ownership mortgage. Repayments on a £200,000 home would be between £300-400 less a month.

* The scheme could also be less risky. If the price of your property declines, it is likely the Government’s stake would bear the brunt of the loss.

* The shared ownership mortgage is likely to stimulate new house building, which should increase the amount of properties available to the first time buyer.