Applicants for first time buyer mortgages should have to take a course of study and an exam, before they are given a first time buyer mortgage, according to the chairman of a leading UK consumer help service.
Addressing members of the credit industry, Malcom Hurlston of the Consumer Credit Counselling Service emphasised the need for those seeking first time buyer mortgages to fully inform themselves of the financial burden that comes with first time buyer mortgage deals.
First time buyer mortgages should be sold with a health warning, not tax breaks, and those taking on first time buyer mortgages too soon were those most likely to have difficulty and fall behind with payments, he said. Mr. Hurslton pointed to pre-buying education available to those seeking first time buyer mortgages in the US.
Mortgage advice and the services of an independent financial adviser were particularly crucial to those taking on first time buyer mortgages who were also on low incomes. He pointed to Northern Rock as an example. “Was it not apparent to everybody here that 100/120% mortgages, some partially disguised as unsecured, was dangerous madness?” he said.
First time buyer mortgages should be sold “like driving licences, after study and an exam,” he said.
The Council of Mortgage Lenders issued a response to Mr. Hurlston’s comments by pointing out that most of those with first time buyer mortgages who got into trouble did so because of a change in their circumstances, such as being made redundant.
A recent report from the Association of Independent Mortgage Advisers (AIMI) showed that taking independent mortgage advice results in finding better first time buyer mortgage deals in 9 out of 10 cases, and will save on average almost £1,000 per year in repayments on a first time buyer mortgage, and on most UK mortgage deals.
