Yorkshire Bank: First-time buyers considering more costly mortgage options

Mon, 29 Jan 2007

First-time buyers are considering taking on greater levels of debt than ever before in order to get onto the property ladder, according to the findings of a new study.

A survey from financial services provider Yorkshire Bank has found that four in five first-time buyers would consider taking out a mortgage deal that featured more than the standard 25-year repayment period.

However, mortgages with extended repayment terms typically involve the homeowner spending more money on the mortgage over the lifetime of the deal.

Another finding of the study is that three in five prospective first homebuyers would consider arranging a mortgage that was five times their income.

Traditionally, it is recommended that homebuyers negotiate a mortgage that is within three times their income to ensure they can meet monthly repayment costs.

Gary Lumby, head of retail at the financial services provider, explained the significance of the findings.

"To try [and] get onto the property ladder now before prices are totally out of reach, first-timers are taking greater financial risks," he said. "Saddling themselves with such huge debts isn't wise."

Last week, banking institution the Bank of Scotland claimed that annual UK house price inflation in the fourth quarter of 2006 stood at 9.9 per cent, in news that may concern many people looking to arrange their first mortgage.

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