Mortgages are not without their pitfalls and the first-time-buyer mortgage market is no different. First-time-buyer mortgage applicants who are not able to put down a deposit on a property are being hit with huge fees and higher interest rates by some leading lenders.

While banks and building societies seem to be helping first-time-buyers get onto the property ladder by issuing first-time-buyer mortgages that lend up to 100% of a property's value, borrowers are being forced to pay higher lending fees on these products, which can cost around £1,500, and are unable to get access to the cheap interest rate deals offered to other borrowers.

Borrowers who have the required deposit are able to secure mortgage products with interest rates more than one per cent lower than first-time buyer mortgage products made available through the same lenders.

First-time-buyers are widely considered to be the borrowers who can least afford to pay such costs when applying for a mortgage. In recognition of this, many mortgage lenders have now stopped charging higher lending fees on their first-time-buyer mortgage products because of the extra financial burden. Some lenders, however, have not scrapped such fees and continue to charge them on mortgage products that have loan-to-value ratios above 90 per cent.

The higher lending fee pays for an insurance policy which protects the lender if the home is repossessed and the bank makes a loss when selling it. It does not, contrary to popular believe, provide any protection to the borrower.

With the average property price in the at an all-time high, the majority of first-time-buyers are struggling to find the traditional 10 per cent deposit required to buy a property, which would prevent them from paying a higher lending charge. For first-time-buyers who manage to save for part of the ten percent deposit required, they may still be required to pay a higher lending charge.

For example, if a buyer had a 5 per cent deposit for a house worth £100,000, they would require a £95,000 mortgage. For the money borrowed above 75 per cent of the property price, £20,000, the bank will charge a higher lending fee.