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News: Desperate first time buyers prepared to use credit cards for deposit

Tue, 08 Nov 11

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.

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 per cent) intend to turn to the ‘bank of mum and dad’ and 5 per cent will be forced to sell a personal asset such as a car. But the fact that 10 per cent 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 per cent also being concerned about obtaining a mortgage. Despite a new government initiative, FirstBuy, being announced in May, most (63 per cent) still believe the government should do more to help them buy their first home. Sadly, 16 per cent of those polled don’t ever expect to own their own home while a fifth believe they will be in their 40s.

To address some of the issues raised in the survey, the SmartNewHomes has launched a First Time Buyers’ Club designed to give information on the options available and the steps involved in the journey to owning a new home.

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.'

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