As banks continue  to impose tight lending restrictions on home-buyers making it near impossible for first-time purchasers to get on to the market, estate agents and vendors are taking matters into their own hands to help make taking that first step more affordable.

When buying a house, a purchaser is required to pay a purchase deposit and a mortgage deposit. These should not be confused.

A purchase deposit is payable to the seller on exchange of contracts to demonstrate the purchasers serious intentions to go through with the sale. This normally amounts to 10% of the agreed purchase price. 

A mortgage deposit is the difference between the agreed asking price and the amount of money a mortgage broker is willing to lend towards the total value of the property. This is money that you must pay out of your own pocket. Depending on the lender, this deposit can be anything up to 25% of the total value of the property. However, because you don't get your mortgage advance until completion, the purchase deposit will form part of your mortgage deposit.

For many purchasers, it is finding this initial deposit that is holding them back from getting on the property ladder. In an attempt to help purchasers by reducing this initial investment, vendors that are keen to sell, are now trying to entice buyers by offering to pay 5% of their deposit upfront. So in effect, the seller is agreeing to waive half of their purchase deposit.

Some mortgage lenders may or may not agree to accepting this money as a contribution towards their mortgage deposit. If they don't, then the purchaser should treat it like receiving a 5% price reduction on the property and they will then be required to put down the full 100% deposit on the agreed selling price less 5%. So, if the property was worth £100,000 then the purchaser would have to pay a deposit based on £95,000.

Carl Parle, branch manager and senior valuer at Sutton Kersh's West Derby office comments, "We are recommending the 5% deposit sales incentive to many of our vendors as an effective way of enticing buyers and up-take has been high. It has also been well received by purchasers. From experience, I can say that it has helped to push some sales through. Whilst mortgage deals are improving, it is finding the funds to support the initial deposit that continues to be a huge problem for many buyers. This tactic is especially popular with first-time buyers and people trading up. Whilst it isn't a new tactic; developers of new homes have been using it for many years, it hasn't been common in the broader estate agency market until now and is a sign of the difficult market conditions we are operating in. "

"The market has improved significantly over the last 6months. Whilst it continues to be a buyers market with many great deals available, we are witnessing a stabilisation in values and increased competition amongst buyers."