26 May 2005
First-time buyers have backed an online 'debt test' designed to assess their future borrowing risk.
The Council of Mortgage Lenders (CML) has published a report revealing that two thirds of recent first-time buyers believe an online test would be useful.
The test is currently being developed by the Financial Services Authority (FSA) and aims to provide first-time buyers with a clear indication of their credit position, as well as the likelihood of experiencing payment difficulties in the future.
Alex Solomon, policy advisor at the CML said: "Problems faced by mortgage customers can be minimised by a combination of improved understanding of the risks associated with home-ownership and the availability of a co-ordinated and comprehensive safety net.
"Evidence from the CML's consumer research clearly indicates that both current and potential home-buyers feel that the concept of a 'debt test' would be useful when they are assessing their ability to afford a new home and the associated repayments."
The survey found that many first time buyers failed to take out cover for all adults in the household.
The FSA hopes that the debt test will ensure that first-time buyers are fully aware of the risks involved in purchasing a property and the financial implications of taking out a mortgage.
The online test is part of the FSA's attempts to ease chronic levels of personal bankruptcy and debt in the UK, as well as encouraging the growth of the first-time buyer sector.© DeHavilland Information Services plc
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