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First-time buyers skimp on income protection

Thursday, 17 August 2006 12:00 AM

The perilous financial state that first-time buyers have to put themselves in to get on the housing ladder has been exposed by a new survey.

In the event of losing their regular income, nearly half of first-time buyers would only be able to meet their regular mortgage repayments for six months, according to research by Post Office Financial Services.

This is partly because the average house deposit has now risen to £11,710, meaning many first-time buyers have to use all of their savings for this - leaving nothing in reserve.

Household running costs - spending on council tax, insurance and bills - are leaving first-time buyers further out of pocket.

Despite this, many first-timers are not doing anything to protect against loss of income arising from accident, sickness of unemployment.

Forty-four per cent of respondents believe payment protection insurance is too expensive, while a third believe they do not need it.

"First-time buyers tend to overstretch themselves, but need to consider what they would do if they lost their income," said the Post Office's Claire Oldstein.

"It's unlikely they will have a big enough rainy day fund to rely on - especially after pulling together a deposit."

One in five first-time buyers would rely on friends and family to help them pay their mortgage if they lost their income.

One in 20 admits they would have to sell their house if they lost their job.

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