The majority of 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, reveals a report from Alliance & Leicester Mortgages.
Despite 70% of potential buyers claiming to actively save for their deposit, three out of four (75%) admit they have outstanding debts.
On average, a prospective first-time buyer is in the red by £5,860.
Londoners turn out to be more prudent when it comes to managing borrowed money. Despite the expensive lifestyle the capital is renowned for, they have a lower amount of debt, at £5,350, when compared with the most indebted region of the West Midlands.
There prospective first-time buyers have an average £6,870 of debt with those in the East of England in debt by £4,210 each.
On average men have more debt than women with debts of £6,290 while women typically owe £5,400.
Those in their later 20s (25 - 29 year olds) are in the most debt, owing £6,000 on average. Only 24% of potential first-time buyers say they are completely debt-free.
Nearly a third of would-be homeowners admit to not saving a penny towards their deposit - despite having aspirations of getting onto the property 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, says: "Our research reveals that while many first time buyers are diligently saving for their deposit, some are not being as financially frugal as they could be. Whilst buying a house can seem like a top priority, those looking to buy for the first time will find it worthwhile to pay off their outstanding debts first."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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