The Alliance & Leicester ‘First-Time Buyer Finance Report’ revealed 20 per cent of first-timers view their financial fling as a treat before they save for a deposit and mortgage. Over half of all aspiring FTBs will buy a car, at an average cost of £6,529, while 15 per cent will go on a holiday costing over £1,000.
The study indicated men were the main culprits, spending £5,732 on average, before committing to a property, while women spent £1,600 less.
70 per cent of FTBs expected to have to make significant financial sacrifices once they moved into their new home, with most of these arguing that they would have to curb their spending for two years.
Commenting on the findings, Richard Taylor, head of mortgages at Alliance & Leicester, said: “Our research shows that first-time buyers plan to indulge before getting onto the housing ladder. Understandable as this may be, splashing out on a treat to the tune of £5,000 needs to be considered and budgeted for carefully.
“First-time buyers seem to have a bleak picture about moving into their first property, thinking they will have to sacrifice their social lives in order to get on the housing ladder. More and more mortgage lenders are using affordability measures to assess how much each consumer can realistically put towards their mortgage each month. This should make it easier for first-time buyers to plan their finances and not worry about being able to afford the mortgage payments every month.”
Kevin Paterson, managing director at Park Row Mortgages, argued that FTBs failed to realise the costs involved in purchasing a property. He said: “I don’t think first-time buyers do realise the costs in buying a house. We have had clients who’ve spent too much on holiday and had to reduce the amount of money they are borrowing.”
