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Desperate first time buyers turn to credit cards

Monday, 7 November 2011 10:46 AM

First time buyers are becoming so desperate to get onto the property ladder that they are prepared to rely on credit cards and bank loans to raise capital for a deposit.

In a survey by SmartNewHomes one in 10 said that they were prepared to rack up debts through borrowing to help get over the financial hurdle of paying out for a first deposit.

Steve Lees, director at SmartNewHomes, said that first time buyers still felt homes are "out of their reach" despite prices falling across most of the UK.

He added: "With renting becoming increasingly expensive they are resorting to credit cards and bank loans as a way of getting on the ladder.

"Interest rates remain low, making mortgages relatively cheap, so buyers are prepared to take on debt in the hope they will be able to pay it back at a later date."

Half of those surveyed plan to use savings for a deposit and 20 per cent will turn to the bank of mum and dad. Five per cent could be forced to sell an asset such as a car.

Lenders' reluctance to give loans to first time buyers has resulted in 41 per cent expressing concern at their ability to get a mortgage.

Despite the launch of FirstBuy, a government initiative aimed at helping to get people on the housing ladder, 63 per cent still believe the government is not doing enough to help.

Lees continued: "We would recommend that those thinking about making their first home purchase but struggling to raise a deposit look at all the sensible options available to them, including government shared equity schemes like FirstBuy, incentives and deals offered by housebuilders, and the possibility of buying with family and friends."

Sixteen per cent of those polled do not believe they will ever be able to own their own home, while a fifth think they will be in their 40s.

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