HBOS, Britain’s biggest mortgage lender, will launch a loan for graduates and professionals today that will allow them to borrow more than the value of their property to help with the initial costs of buying a home.

The bank hopes that the launch of the mortgage, through Birmigham Midshires, the specialist lending arm, will position it as the No 1 player in a niche market worth £10 billion, or 3 per cent of the total mortgage market, according to HBOS estimates.

Other lenders that offer similar deals include Northern Rock, Coventry Building Society and Bradford & Bingley.

The deal, called Mortgage Plus, will allow borrowers with high future earning potential to take out loans up to 125 per cent of their property’s value, made up of a 95 per cent loan secured against their home and an unsecured personal loan for up to 30 per cent, which can be no more than £30,000. The surplus cash can then be used to pay for outgoings such as stamp duty and furniture.

Borrowers will still require a minimum deposit of 5 per cent to take out the loan.

The move is expected to boost demand for mortgages worth more than 100 per cent at a time when fears are growing that homeowners are already borrowing too much against their incomes.

The deals also put borrowers in danger of negative equity if house price growth grinds to a halt. Those whose salaries do not rise as expected may also struggle to pay back the additional loan.