Finance Credit Loan

For many people, the chances of getting a foot on the property ladder any time soon appear to be slim to none. However, there is a glimmer of hope for first time buyers, as ‘Rent to Buy’ schemes emerge. One building society in particular that has launched just such a scheme is the Saffron Building Society, which operates in the South of the country.

This particular scheme allows people to borrow if they can show that they have a record of paying rent, on time, for as little as 12 months. For Saffron Building Society, this would, in many cases, be proof enough that the borrower ids capable of making monthly mortgage repayments. In addition, the borrower would have to be able to place just a 5% deposit on the mortgage. The arrangement would mean that someone who paid rent of £1,000 per month and was able to put down the 5% deposit would be able to buy property worth up to £155,000.

Many would-be first time buyers are unable to proceed with the purchase of property due to poor credit history. Although the borrower will still be subjected to credit checks, this scheme adopts a much more manual approach rather than the usual, automated system where you’ll be declined if there are any blemishes on your credit history.

Broker, John Charcol, has been quoted as saying:

“The common sense way affordability is calculated for this mortgage will be a breath of fresh air to any first-time buyer who has suffered from the ‘computer says no’ approach adopted by too many of the major lenders.” Many households are paying rents equal to or more than they would pay on monthly mortgage repayments. Credit history and large deposits are the main factors keeping many people from making their way on to the property ladder. Schemes such as this make the property market far more accessible to first time buyers and will be welcomed with open arms by many people looking for alternatives to paying ‘dead rent’.

At the end of April 2011, personal debt in the UK amounted to £1,452 billion – the current sum total of personal debt is almost equal to the country’s entire GDP for 2010.

The average household debt stands at £55,854 (or £8,121 if mortgages are excluded) – a property is repossessed every 14 minutes in the UK and landlord possession orders are made 265 times a day. £179 million is paid in interest every 24 hours, and an individual is declared bankrupt or insolvent every 4.36 minutes.

The total amount of lending in April 2011 increased by £1.2 billion (there was a £700 million increase in secured lending and a £500 million increase in consumer credit lending). At the end of April, total secured lending had reached £1,241 billion and total consumer credit stood at £211 billion.

In the past year, £9.5 billion of loans were written off by UK banks and building societies, which is equivalent to £20.71 million every day, and the Citizens Advice Bureau deals with nearly 10,000 people struggling with debt problems daily.

Redundancy is fuelling increasing levels of debt, with 1,384 people made redundant every day and 850,000 unemployed for 12 months or more.