First time buyer 'forgo' mortgage protection insurance

13-Nov-2006

First time buyers are potentially leaving themselves vulnerable to interest rate shocks, as many are now choosing to avoid mortgage protection insurance, experts suggest.

According to a study by the Post Office, 45 per cent of first time buyers are without any form of protection insurance against their mortgage and are vulnerable to income shocks, should they lose their jobs or become unable to work.

Of this group, nearly half cite cost as a determining factor behind their decision to not take payment protection insurance.

"After paying a deposit, fees and stamp duty, it's unlikely that many first time buyers would have enough money in savings to rely on if they couldn't work and lost their regular income," said Claire Oldstein, head of communications at Post Office Financial Services.

"First time buyers are putting their finances and potentially their homes at risk by failing to protect their income," she added.

As a result of financially overstretching themselves to get on the property ladder, around five per cent of first time buyers admitted that they would need to sell their home if they found themselves unable to make mortgage payments.

Post Office Financial Services is a member of the Royal Mail Group.

First time buyers concerned about how an increase in interest rates might effect how much they would have to pay each month should consult a good broker.

As the market for first time buyers toughens, new companies are offering new services to help first time buyers buy new properties by working with the house-builders.

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