A first-time buyer needs a salary of almost £40,000 to afford an average mortgage acrossBritain, new figures suggest.
First time buyers on average took out a mortgage loan of £119,000 in February, out of reach to those earning the national average salary of £26,500.
The number of first time buyers has significantly increased in recent months. It is believed this can be attributed to the recovery of the property market and a desire to get a foot on the ladder before prices rise any further.
The total amount borrowed by first-time buyers hit £3.1 billion in February, 55 per cent more than 12 months earlier, which has caused concerns that many people are being overly optimistic as to what they can afford.
To enter the home market, most young buyers borrowed 3.4 times their gross income to take out an average loan of £119,000, up from £106,250 last February.
Current low mortgage rates have kept the repayment burden light so far, with first-time buyers spending 19.2 per cent of their total income to cover capital and interest payments.
This is close to the recent lowest level of 19.1 per cent recorded in April 2012, April 2013 and November 2013. However, this is set to change with the Bank of England expected to raise the base rate next year.
The Help to Buy scheme has been credited with stimulating the housing market, moving buying back into the forefront of the public psyche and easing credit conditions.
The above is not legal advice; it is intended to provide information of general interest about current legal issues.
If you would like further information on the costs involved in the buying and selling of residential property please contact our New Business Team on either 01245 343980 or newbusiness@gepp.co.uk
