Money Insider: At last, decent loan rates for first-time buyers Only a fortnight ago I was using this column to moan about how the cheap government money available from the Funding for Lending Scheme (FLS) wasn't reaching those who needed it most. The market has been awash with rate cuts and super-low-cost deals for those fortunate enough to have a 40 per cent-plus equity stake in their property, and until now lenders have decided to play it safe with the higher-risk end of the market. That all changed on Tuesday, when Co-operative Bank launched a two-year fixed-rate mortgage priced at just 3.99 per cent, which is available even for those who can offer only a 10 per cent deposit. The next-best deals on 90 per cent loan-to-value (LTV) loans lag some way behind, with Chelsea Building Society at 4.19 per cent and a £1,495 fee, and Market Harborough Building Society at 4.2 per cent and a £395 fee. It's excellent news to finally see FLS money being used to help those trying to get on the first rung of the housing ladder, particularly when you compare the new Co-op rate with what was available on the market just a couple of months ago. In late August the cheapest 90 per cent LTV, two-year, fixed-rate was 4.84 per cent plus a £495 fee from Yorkshire Building Society. On a £120,000 mortgage (25-year term) you'd have paid £690 per month for 24 months, whereas with the substantially lower 3.99 per cent rate the monthly repayment falls to £632. Over the course of the two-year term, allowing for interest rates and product fees, the borrower will save £1,887, which is a really useful saving for someone who is in the early years of home ownership. The cash saved could be used for decorating and do-it-yourself projects, or maybe to buy white goods and home furnishings. Either way it's good news for retailers as well as the broader UK economy. Providing higher-LTV mortgage products involves lenders having to set aside more capital reserves than with a lower risk 60-75 per cent advance. However, access to cheap finance via FLS will have diluted the overall cost to the Co-op of providing this 90 per cent LTV finance. John Sexton, a mortgage expert at Moneynet.co.uk, welcomed the move. "With Co-operative Bank pledging to lend the equivalent of £1m per day to first-time buyers in 2012, hopefully this will be a catalyst and encourage other lenders to follow suit," he said. The focus needs to shift away from the saturated 60 per cent LTV 'lending safe haven' to delivering real and affordable home-loan options to those who really need it. The real test will be to see how long these rates hang around, and whether they create a domino effect with rate cuts from the big high-street rivals. Don't suffer later for an early Christmas payday It's less than 50 days to Christmas, so it's a good time to make sure your bank balance will be able to cope with the additional financial strain. It's the most expensive time of the year for most of us, so it's a great help if your employer enters into the spirit and stumps up your December salary a week or two in advance. The downside of getting paid that bit earlier means it's even easier to lose track of all those debit card transactions and direct debits, particularly when your next payday could be up to six weeks away. Failing to keep a close watch on your current account balance and adopting a "worry about it later" attitude could see you exceed your overdraft limit and face a big bank charges bill early in 2013. If you don't already have an agreed overdraft in place or you think you could do with a little more financial breathing space over the festive period, speak to your bank or building society now to arrange an authorised overdraft sufficient to see you through to the end of January. It's usually a pretty pain-free process and can be arranged very quickly, either online, by phone or face-to-face at your local branch. Once you've got your safety net arranged, make sure you check your account on a frequent basis to avoid being hit with bank charges - there's no excuse not to these days with the information available 24/7 online, on your smartphone or via an ATM. Some banks charge overdraft fees daily, others charge monthly, some do both, but whichever tariff you're signed up to, it can end up hitting your pocket hard. If you keep on top of your spending and stay within your agreed limit then the charges you incur will be minimal, and at least you won't give the banks the chance to take the shine off your Christmas and New Year celebrations. Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk