Cash points

Specialist mortgages are available for teachers who want to buy property, writes Sean Coughlan

Finding an affordable place to live is a huge problem for many teachers, particularly those working in areas where prices have risen sharply in the last few years. And it's not even as simple as having a starting salary that is dwarfed by the skyscraper prices.

Teachers start their first jobs after four years of student borrowing; it's not unknown for them to have debts which are as much as their annual salary. And when these teachers apply for mortgages, their debts are going to limit the amount they can borrow. So debt-ridden teachers can be stuck with the gloomy prospect of indefinite renting.

But there are now specialist mortgages that are aimed at recent graduates who would usually not get far with a mortgage application. For example, Scottish Widows has a graduate mortgage which offers a 102 per cent loan, and promises to be more understanding about credit histories, and to assess each case on its merits.

Offering to lend more than the asking price is a recognition that teachers who have graduated over the past seven years are unlikely to have sufficient savings to cover their legal costs and stamp duty.

Scottish Widows can lend up to five times a salary. And they are happy for parents to act as guarantors for a proportion of the debt, so allowing a higher lending limit. Gordon Bowden of Scottish Widows says that the emergence of such mortgages is a recognition of the massive problem facing people trying to get on to the property ladder.

But it also raises a number of questions. Even though it might be easier to borrow, it won't make paying back any easier. And collecting even bigger debts could be a depressing way of spending your twenties.

There is also uncertainty about the direction of the property market this year. Prices are not expected to rise as quickly as in 2002, and some analysts believe the market could fall sharply. And no one is going to want to stretch their budgets to breaking point for a property that is about to collapse in value.

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