Personal Loans Lead To Young Homebuyers Facing Debt Difficulties

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Mon, 20 Aug 2007

Young homebuyers in the UK are getting into serious financial difficulties as they seek to pay off monthly bills through expensive personal loans and overdrafts – which only lead to dire consequences for their long term finances, according to a leading debt charity .

Figures from the Consumer Credit Counselling Service (CCCS) revealed that people under the age of 25 who have bought a home owe two-thirds more than tenants in the same age group, while homebuyers also accumulate several more lines of credit .

The charity said that one of the main factors behind the financial difficulties was an over- eagerness to jump on the property ladder at a time when interest rates are rising.

The CCCS based its comments on its regular quarterly Debt Dashboard study of 73,000 client records and their ability to repay.

It stated that people who use its helplines owe an average of £16,351 by the time they reach the age of 24, while homebuyers under-25 owe an average of £20,290 on unsecured credit, compared with £12,113 for tenants in the same age group.

Malcolm Hurlston, chairman of the CCCS, commented: "There is a danger in young people getting on the housing ladder before they are ready financially."

"Before taking out a mortgage the under 25s should make sure they can still afford to live and not rely on credit to plug the gaps."

Personal loans make up more than 50 per cent of the debt that young people in the UK accumulate, according to the CCCS, which added that under-25s are also the most avid users of expensive credit, such as overdrafts, store cards and catalogues.

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