Debt offers mortgage solution

Bradford & Bingley’s Duncan Pownall, who runs the mortgage development sector at the lender, said that even though increasing numbers of young people were in debt it did not mean they would be unable to borrow money.

Citing new research which shows that nearly half of first time buyers owe £8,000 or more before they get on the first rung of the property ladder, Mr Pownall said the risk involved was not necessarily prohibitive.

“Getting a mortgage when you are already in debt is not really risky; it limits the amount of what you can borrow,” he explained.

“What you owe ‘reduces’ your annual salary when you calculate, for example, to borrow four times your salary.”

“It has an important impact on how much you can borrow,” he added.

The growing culture of debt among young Britons, as student loans and the growth in credit cards have fuelled borrowing, has meant many lenders have sought ways to enable consumers to obtain credit even when they are struggling.

Consumer debt issues have also increased during this time, however, with the Citizens Advice Bureau reporting more than 700,000 cases in 2003/4 compared with 405,800 in 1996/7.