Wider implications of home ownership

DIRECTOR OF PROTECTION MARKETING, AXA
DIRECTOR OF PROTECTION MARKETING, AXA

The Consumer Credit Counselling Service has called for first-time buyers to sit an exam before being given a mortgageThe debt charity suggests that this will limit the trend of people getting into debt as a result of rushing into purchases they neither understand nor can afford.

The recession has had a big impact on the housing market but with it showing signs of recovery, a number of consumers will be hoping to become home owners.

The idea of an exam that if passed proves that buyers understand the concept of a mortgage is interesting but it may not be practical.

Financial capability in the UK is low and we need to address this to ensure consumers understand what they are buying into. Perhaps more important than the initial purchase is the ability to keep up with the regular drain on their income.

But what happens if a first-time buyer becomes unable to work due to illness or is left unable to perform the work they did before, resulting in a lower paid job?

Advisers will appreciate that first-time buyers are strapped financially but the idea that they need to understand the long-term implications of taking out a mortgage needs to be extended to all the financial aspects of house purchases.

This includes the importance of home and contents insurance, protecting the incomes and lives of those paying the mortgage and all the bills that need funding.