A recent poll conducted by iammoving.com has found that 30% of first-time homebuyers are using risky unsecured loans, borrowings, or credit card debt to put together a deposit for a home.
Of the 250 first-home buyers either in the process or have just bought their first home who were polled by iammoving.com, 42% has used savings to put down a deposit on their home, which is the safest possible means.
The survey found that, as hosing prices are sliding, many first-time buyers are turning to highly high-risk ventures to gain enough for their deposits. For the $10,000 to $15,000 deposit, 13% have used an unsecured loan or credit card debt to raise funds, and 17% have gained the money from the family or friends.
Banks no longer offer 100% mortgages. However, 7% of those polled had already signed on with one of these deals and have used it for their first home, an extremely risky venture in today’s unstable market.
A further 7% have used shared ownership for their first-home deposit, 9% have used some part of their inheritance early, and 5% have sold a major item, like a car, to gain their deposit.
Simon Preston, chairman of iammoving.com, which is an online service which gives people moving the opportunity to notify banks, councils, government departments, loyalty card schemes, utilities, and the like of a change of address, said that this poll was indicative of how important a first-home is to buyers today.
Preston spoke about the high-risks associated with unsecured lending, and that it placed first-time buyers in a precarious situation, relying on no great change in the market or their personal financial situation. First-time buyers are looking to more risky means of gathering the funds for their deposits, in spite of banks taking away the 100% mortgages.
Though he did express understanding as to how many feel at finding their dream home and not being able to afford it, the chairman of iammoving.com, none-the-less urged buyers to use savings for their deposits, as it would act as a healthy barrier between market fluctuation and their financial situation.