Yorkshire bank seen increase in mortgage activity

It has been reported that the Yorkshire Bank has seen an increase in mortgage activity of late, with an increase in mortgage applications from interest parties as well as an increase in the number of mortgage applications that are being approved by the bank. Read more

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FTBs surprised by first-year costs

Many people who take out a mortgage for the first time are surprised to find that the first year in their new home is a real financial strain.

According to Yorkshire Bank, a large number of first-time buyers (FTBs) fail to budget for a number of outgoings and soon find themselves living on very little money.

The bank claims that 44 per cent of FTBs completely forget to budget for legal fees, stamp duty and a property survey.

A further eight per cent do not put any cash aside for the cost of moving, while unexpected costs, such as damaged or broken appliances, are also not accounted for.

“It is too easy to quickly move on to thoughts of redecorating and building a new conservatory as soon as the offer is accepted, failing to factor in all the costs of a new home,” commented Gary Lumby, head of retail at Yorkshire Bank.

“Overlooking costs such as surveys and stamp duty is asking for trouble when, as our survey suggests, there are likely to be less predictable expenses as well.”

Yorkshire Bank’s research found that the majority of people do put money aside for redecorating when they move into a new home.

A total of 76 per cent of home owners fit a new kitchen and bathroom within the first year of moving into a property and this is another cost that FTBs must consider.

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First-time buyers taking risks

First-time buyers are prepared to take bigger financial risks to get on the property ladder as house prices continue to rise.

As the third interest rate rise in five months looks set to have just a minor impact on the price of a house, Yorkshire Bank says many consumers feel forced into taking big chances with their future.

According to the bank, three out of five first-time buyers would consider taking out a home loan that was five times their income.

In addition, 80 per cent would also consider getting a mortgage which is paid back over more than 25 years in order to make the monthly payments more manageable.

“With the average house price nearing £200,000, this year may feel like the last chance saloon for first-time buyers already finding it hard to buy,” said Gary Lumby from the bank.

“Saddling themselves with such huge debts isn’t wise as they could still be paying off their mortgage well into their sixties or even seventies.

“They may also face breaking point should interest rates increase again. Unfortunately for some, they feel it is their only option,” he added.

Yorkshire Bank has also found that 28 per cent of first-time buyers are so keen to get onto the property ladder that they are willing to offer above the asking price straight away for a house which they want.

In response to the current housing climate, 15 per cent of parents have started a home fund to help their children buy a house when they are older.

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