Adverse Mortgages UK

Three-quarters of aspiring first-time buyers (FTBs) are struggling with debts while they are saving for a deposit, a new report from Alliance & Leicester Mortgages has revealed.

The bank said that the majority of FTBs have on average £6,000 worth of debt while they are saving up for a deposit on their first home. Despite this, most aspiring FTBs hope to have bought their first house within two years.

Stephen Leonard, director of mortgages at Alliance & Leicester, said: "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."

Indeed, in many cases outstanding debts mean that prospective FTBs are not managing to save anything at all towards a deposit.

Some 30 per cent said that they have not managed to save a penny for their deposit, as average credit repayments stand at £200 per month. This compares with the £270 per month people saving towards a house are putting away.

Mr Leonard added: "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. 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.

"I would urge first time buyers to be pragmatic about getting onto the housing ladder if they have outstanding debts. It would be advisable to try to avoid unnecessary debt and look to pay off any outstanding debts before they start saving for a deposit."


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