Thursday, 12 June 2014

Are young homeowners becoming more worried by large debts to buy a home?

It would seem so...

Recent news suggests that approximately half of all young homeowners who have relied on extra help and funding to get on the property ladder are becoming increasingly worried about the level of debt they have acquired. In addition, young property owners are more likely to have depended on other funding measures such as getting mortgages based on 25 years and above in order to reduce monthly repayments. Loans from family and friends  as well as the recent help to buy scheme have also contributed to the ability for home buyers to purchase their first home. 

It has also been highlighted that 7 out of 10 home owners aged between 25 and 34 have said that they have relied on a deal. Such deals include taking out an interest only mortgage or a loan with a low interest rate in order to make their first home more affordable. As a result some have argued that young home buyers are resorting to 'desperate measures' so that they are able to jump on the property ladder. A ladder which only sees house prices increasing. However, although some have managed to jump on the property ladder due low mortgage rates and interest deals it seems that these schemes which make homes more affordable to first time buyers is only a short term fix. Some argue that this does little to resolve the fact that more affordable homes need to be built in order to reduce the rising property prices due to an imbalance with supply and demand. 

Just below half of those between 25 and 34 years who had received help in order to purchase their first home have suggested that they are worried over their housing debt. Furthermore, statistics also show that a quarter of young people who also relied on some form of help are worried about being able to pay off their mortgage, whilst one fifth faced the worry of slipping into negative equity.

To put things into some form of perspective, the average house price in Britain is now £186,512, well above last years national average.

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