Buying a house ‘could lead to credit card debt’

First time buyers could find they are piling up credit card debt in their attempts to get on the housing ladder.

A survey by new-build housing sales company SmartNewHomes has found those trying to get on the property ladder use a range of measures to find the cash for a deposit, from using up savings (around half) to relying on parental help (18 per cent) and selling existing assets (five per cent).

However, it also found ten per cent would use unsecured borrowing such as loans and credit cards to pay, meaning this debt would have to be paid back as well as the subsequent mortgage – something the company describes as providing "cause for concern".

Director of the firm Steve Lees said many consumers are taking this action because the alternative of renting is becoming increasingly expensive.

He added: "Interest rates remain low, making mortgages relatively cheap, so buyers are prepared to take on debt in the hope they will be able to pay it back at a later date."

Mr Lees suggested there are many better and more "sensible" ways to get on the ladder, such as shared equity schemes.

Credit card debt is an issue for many UK consumers, with some potentially needing debt management plans or even individual voluntary arrangements to pay off what they owe.

At the same time, the amount being spent on plastic still amounts to £1,278,000,000 a day according to the latest monthly debt statistics published last week by finance charity Credit Action.

Posted by Paul Thacker