Need Help Claiming Back Charges Or Payment Protection Insurance Fees ? – Click Here
The majority of potential first time buyers are in nearly £6,000 of debt and yet hope to get their foot on the housing ladder in the next two years. So says a new report from Alliance & Leicester Mortgages.
On average, a prospective first time buyer is in the red by £5,860. However, the picture varies across the country - Londoners being the most prudent when it comes to managing borrowed money. Indeed, despite the expensive lifestyle that the capital is renowned for, would be purchasers have debts of £5,350. This is in stark contrast to the most heavily indebted region - the West Midlands - where debt is typically £6,870 per would be buyer. In the East of England it works out to £4,210 each.
On average men have more debt than women with debts of £6,290 while women typically owe £5,400. And it is those in their later 20s (25 - 29 year olds) who are in the most debt, owing £6,000 on average. Only 24% of potential first time buyers say they are completely debt-free.
With so many potential first time buyers in debt, even before they have purchased their first home, it is hardly surprising that 30% of would-be homeowners admit to not saving a penny towards their deposit - despite having aspirations of getting onto the housing ladder in the next two years. On average they pay nearly £200 a month toward credit repayments, in contrast to those saving to get on the ladder who are putting aside £270 a month.
Stephen Leonard, Director of Mortgages at Alliance & Leicester, makes the point that many lenders now use affordability calculations to determine how much they can lend someone and these calculations take into account outstanding debt and reduce the loan amount on offer accordingly.
Leonard adds that it's important to keep up with your payments as any missed payments or defaults could impact on your ability to get a mortgage later on. Better still, clear your oustanding debts first. If you can.
28 September 2006 © Moneyextra.com
