Debt experts warn £2,000 credit card deposit signals return to days of easy credit
Wednesday, 12 February 2014
First-time buyers in the capital will soon be able to purchase their first home, a £250,000 London apartment, by making a deposit of £2,000 that they can pay with their credit card.
Critics of the scheme fear that it will lead to a return to the days of easy credit, one of the key factors which sparked the 2007 crash in the property market. There are also concerns from experts that those who took part in the scheme could find themselves in hot water, saddled with a mortgage they can’t afford in an ever increasing overheated London housing market.
The deal, offered by property developer Galliard, allows homebuyers to secure one of the apartments for a £2,000 deposit – equal to 0.8% of the price. They are then required to pay a further £25,000 – equal to 10% of the price within 20 days.
Debt charity the Money Advice Trust claims that buyers who signed up to the scheme would be ‘seduced by the small deposit’ and warned: ‘Where mortgages become available with little or no deposit… it is important for lenders to be extremely careful with affordability assessments.’