Purchasing your first home is one of life’s goals. Brits love being homeowners - we take a great pride in the type of house we own and eagerly anticipate making money through bricks and mortar.
Figures released this week highlight just how far people are prepared to stretch themselves to get on the property ladder and it doesn’t make for comfortable reading. This is despite warnings that we could be heading towards another debt timebomb.
The Bank of England apparently fears that people are leaving themselves open to going bankrupt with the amount of debt they are taking on when purchasing their homes.
According to the bank, nearly 30 per cent of people are attempting to borrow more than quadruple their yearly salary in order to purchase homes.
If this behaviour continues we could soon be looking at another financial crash, especially when you learn that these figures are the highest since records began and interest rates threaten to creep up.
Experts have warned that caps need to be put in place before individuals really rock the property boat, and people are being warned to take responsibility for their own borrowing and to not push themselves too hard financially.
People should never borrow the absolute maximum – they should always remember that they need to give themselves breathing space. What’s the point in worrying month after month whether you will be able to afford the mortgage? People should strive to live comfortably, not teeter on the brink all the time.
People should also be wary of the cost of living sky-rocketing. If people have no room to manoeuvre because all their money is disappearing on a mortgage, what will the consequences be if household bills start going up and things start going wrong that need repairing such as a car breakdown?
Nobody knows what the future holds so it is always wise to be financially prepared for any scenario.
Borrowing to this extent is irresponsible and puts people in a situation that isn’t sustainable.
Nearly a decade ago the amount of people borrowing to this extent was just over ten per cent, nowadays the figure sits at 30 per cent which highlights where we are in terms of people prepared to live on the financial brink.
We don’t think it’ll be long before the people taking these kinds of risks get stung.