After years of increasing house prices, first-time buyers have never had to borrow so much to get on the housing ladder.

This has prompted concern that they are stretching themselves too far in the quest for homeowner status. Online mortgage company mform.co.uk advises you on how not to overstretch.

Staking it all on 100 per cent

These days it's possible to borrow 100 per cent of a property's value and even more. Abbey, one of the largest mortgage lenders even launch a trial 125 mortgage, whereby borrowers received 100 per cent of the property's value plus an additional loan of £25,000.

The repayments on such a mortgage, however, will be large and unless you're confident that you have a sufficiently high income then this could place a significant strain on your finances.

The tightening of credit markets has meant that the number of 100 per cent mortgages available has also declined in recent months. A recent survey found that a self employed person, with a modest income, will now struggle to borrow more than 75 per cent of a property's value. This is a stark contrast to earlier in the year when a self employed person could borrow 90 or even 95 per cent of a property's value.

Saving yourself

If you want to avoid the Higher Lending Charges which mortgage providers impose on borrowers who take out loans with a value of ninety per cent or more of the property, then be sure to save up a sizeable deposit before applying.

To borrow £200,000 for a £250,000 property from a modest income will be difficult with only a handful of lenders willing to take you on. Northern Rock, for example, will offer you a three-year fixed deal at 7.59 per cent with a start up fee of £555. The total cost of this mortgage over three years would be a huge £54,214.

If, however, you had a large deposit and only required to borrow £75,000 then the difference is striking. On the same property, Giraffe will offer you an introductory rate of 5.82 per cent with zero start up fees. The cost of this mortgage over three years works out at £17,329.

Security of a fixed rate

If you're worried about what you can afford then a fixed-rate mortgage offers the greatest security, because the monthly repayments will remain the same throughout the term. If you can find a deal which you know you can afford then it could be worthwhile. However, it's worth remembering that your fixed-rate deal won't last forever and when you come off it you'll either be at the mercy of national interest rates or if you look for a new fixed-rate you may not be able to find the same deal or one which is as competitive.

Know the cost

Getting on to the housing ladder can be worthwhile in the long term as homes normally appreciate in value, meaning that by the time you've paid your mortgage you'll have an asset which is worth more than what you've paid for it. This isn't to say that you should push your finances to the limit to get on the ladder, renting can provide good value for money until the time you feel like you can afford a property more comfortably.

If you do decide to take on a mortgage it's important to make sure you are informed about all the costs involved. Try and establish what the true cost of the mortgage will work out as over the term once you've factored in all the fees. Shop around and remember that a 1 per cent difference on the amount of interest you pay on a £200,000 loan can work out hundreds or even thousands of pounds over a few years, so be sure that you're comfortable with your deal before signing on the dotted line.