One in six young adults are happy to take out a mortgage of more than four times their annual salary in order to get on the housing ladder, according to new research by LV= (formerly Liverpool Victoria).
And in London, people are even more prepared to take the risk – seven per cent are prepared to borrow six or more times their salary
The study also revealed that 30% would do without financial protection so that they could take out a larger mortgage, and LV= is urging homebuyers to think about whether they could continue to meet their mortgage repayments in the event of long-term illness or injury.
Most people – 87% - say they would restrict their borrowing to four times their salary with 58% saying they would only borrow three times their salary.
But there is as till a very obvious generation gap when it comes to taking the risk – only one in ten adults over the age of 35 would borrow more than four times their income compared one in six under 35s.
Nigel Snell, Communications Director at LV= said: “Home-owning has long been a national passion, and one which continues to cascade down the generations; but what concerns us is just how many younger buyers are prepared to stretch themselves well beyond traditional lending limits without arranging adequate financial protection.
“These were hypothetical responses and we fear that, under genuine pressure to realise their home-buying dreams, many more buyers will choose to walk the mortgage highwire without a financial safety net.”
“A looser set of borrowing habits is taking root among younger generations of home-buyers. We understand the pressures and realities of today’s housing market, but we urge young families and individuals to think very carefully before deciding to omit financial protection from their home-buying process.”
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