First-time buyers borrowing to the max
While on the subject of mortgages (see previous post on repossessions)�
The Council of Mortgage Lenders says the average first-time buyer now borrows 3.31 times their annual income.
Maybe that doesn’t sound too worrying, but if that’s the average, then half of all first-timers are borrowing more than three-and-a-third times what they earn.
There are more and more reports circulating about lenders offering mortgages of anything from five to nine-times income. (I’m not naming names as I don’t want to encourage you!)
Of course, the lenders will always say they don’t hand out sums of this magnitude to just anyone, that borrowers are carefully vetted and only those on large and reliable salaries get the really big income multiples.
But are they all telling the truth?
An independent financial adviser I was talking to the other day said he was often amazed by just how much mortgage lenders will give first-timers on modest incomes.
If interest rates continue to rise or they get into financial difficulties because they lose their job or partner, fall ill or have a serious accident, they’ll soon be wishing they hadn’t accepted their lender’s ‘generous’ offer.
If you’re thinking of borrowing five or more times your income, follow this link first.
