Since August 2007, the credit crunch has taken a firm grip on the UK property market. When the US sub-prime markets collapsed, banks around the world were left with huge debts and were unwilling to lend to each other. With fears over bad debt and difficulties in borrowing money on the wholesale markets, lenders began turning away business, cutting lending limits and putting up interest rates.

So what action should consumers take now?
Choose the right mortgage deal
There are many types of mortgages available, including:
-Fixed rate mortgages. With a fixed rate mortgage your mortgage payments are guaranteed to stay the same for a pre-determined period - usually two years, three years, five years or ten years. By fixing your mortgage rate you have peace of mind that your payments will not increase for a set period, allowing you to budget accurately. In the current economic situation this is often considered preferable although there is the risk that you will be stuck on an uncompetitive fixed rate if mortgage rates fall.

- Flexible rate mortgages. This type of mortgage allows you to overpay or underpay without redemption penalties. Bear in mind that not all flexible mortgages are the same and some will restrict how much you can overpay during a set period and others will set minimum amounts.

- Tracker mortgages. If the Bank of England base rate rises, so do your repayments - if it falls, then your repayments will go down too. These are often priced more attractively than fixed rates but rely on you taking more of a risk, particularly in the current economic climate.

- Discount mortgages. These mortgages provide a percentage discount from the lender`s usual variable rate for a set period of time. These are useful if you need to save money in the first few years of your mortgage.

- Offset mortgages. These work by linking a savings account to your mortgage - instead of earning interest on your savings, the money is used to `reduce` the balance on your mortgage. So for example, if you had £10,000 in savings and a £100,000 mortgage you would only pay interest on £90,000. These have added tax advantages to higher rate taxpayers due to the reduced interest. If you`re disciplined with your finances these can help save cash in the long run.

- Buy-to-let mortgages. Designed for people who want to invest in the property market and let a home out to a tenant. Since the credit crunch house prices have slipped often leaving landlords with depreciating assets and so these are considered high risk in the current environment.
Is it possible to find a competitive rate?

It`s become increasingly difficult to find a competitive mortgage rate, particularly if your deposit is less than 10-20%. Lenders have also tightened their lending criteria, which has squeezed some borrowers out of the more attractive deals. The good news is that rates have started to fall again due to a reduction in swap rates, although the mortgage crisis is far from over with house prices continuing to fall and home repossessions on the rise. Consequently it`s vital to seek advice from an independent financial advisor (IFA), preferably one who sources the whole of the mortgage market.
Even in the current climate, there is no one type of mortgage that`s right for all borrowers as your personal circumstances will dictate which type of mortgage is the most suitable for you.

Tips for home buyers
- Accept help. Many parents are willing to lend a hand to help you get on to the property ladder, perhaps by gifting you a deposit.

- Extend your mortgage term. Spreading payments over a longer period may make your monthly mortgage repayments more affordable, although you will pay more in interest over the term.

- Budget for home insurance. Mortgage lenders require that you obtain buildings insurance for the mortgaged property. In general, house insurance is designed to protect you from financial meltdown should anything happen to your property - such as a fire or flood for example.