First Time Buyers Prepared To Use Credit Cards And Loans To Fund Deposit
One in ten first time buyers are so desperate to raise a deposit that they are prepared to use a credit card or bank loan to cover the cost, according to a new survey of first time buyers by SmartNewHomes. To address some of the issues raised in the survey, the UK’s leading new homes site launched its new First Time Buyers’ Club this week designed to give information on the options available and the steps involved in the journey to owning a new home.
Funding a deposit remains the biggest financial hurdle to home ownership for survey respondents. Half expect to use their savings, while nearly one fifth (18%) intend to turn to the ‘bank of mum and dad’ and 5% will be forced to sell a personal asset such as a car. But the fact that 10% are intending to borrow money on credit cards and bank loans is a cause for concern.
The well-documented reluctance of lenders to give loans to first time buyers has resulted in 41% also being concerned about obtaining a mortgage. Despite a new government initiative, FirstBuy, being announced in May, most (63%) still believe the government should do more to help them buy their first home. Sadly, 16% of those polled don’t ever expect to own their own home while a fifth believe they will be in their 40s.
Steve Lees, Director at SmartNewHomes, comments:
“Regardless of the fact that prices have fallen across most of the UK, first time buyers still feel homes are out of their reach. With renting becoming increasingly expensive they are resorting to credit cards and bank loans as a way of getting on the ladder. Interest rates remain low, making mortgages relatively cheap, so buyers are prepared to take on debt in the hope they will be able to pay it back at a later date.
"We would recommend that those thinking about making their first home purchase but struggling to raise a deposit look at all the sensible options available to them, including Government shared equity schemes like FirstBuy, incentives and deals offered by housebuilders, and the possibility of buying with family and friends. Our new First Time Buyers’ Club has been created to help and offers tips and advice on everything from mortgages to deposits to house prices and incentives."
The First Time Buyers’ Club is free to join and helps first time buyers understand the options available for owning a new home and allows them to access help and guidance on purchasing a property. Those who register can also benefit from personal advice from a panel of experts, share tips with other first time buyers and receive housing market news updates. Visit blog.smartnewhomes.com.