First time buyers 'paying 30% of annual income' on homes

19-Sep-2007

First time buyers and other new homeowners can expect to pay the equivalent of 30 per cent of their own income for the first 12 months after moving into a new property, it has been claimed.

A study from GE Money Lending has found that moving costs, mortgage fees and stamp duty all contribute to annual expenditure of over £11,000 in the first year.

But despite the figure, the typical new homeowner expects to spend almost £3,500 more than this upon moving in, with GE Money Lending adding that mortgage costs alone take up 22 per cent of first time buyers' annual income.

"It appears that most prospective potential buyers are prepared for the costs associated with buying a home, as well as those associated with setting up the property and the ongoing running costs," commented GE Money Lending head of mortgage marketing Gerry Bell.

"Indeed, our research has found that the average borrower actually overestimates what it will cost in every area of the home purchase. In the current unpredictable environment this is unarguably a good sign," Mr Bell added.

The number of loans made to first time buyers fell by seven per cent in July, the Council of Mortgage Lenders reported last week.

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