This is according to new research from LV= which today urges homebuyers to think about whether they could continue to meet their mortgage repayments in the event of long-term illness or injury.
Overall, the vast majority of people claim they would restrict their mortgage borrowing to no more than four times their salary, with a prudent 58 per cent seeing three times their income as their limit.
Find out how much you can borrow
However, there is also a marked generation gap with regards to borrowing. Young people have a readiness to borrow big, with 5 per cent happy to stretch to more than five times their income, whilst just one in 10 adults over the age of 35 say they would stretch beyond four times their income.
Nigel Snell, Communications Director at LV=, said: Home-owning has long been a national passion, and one which continues to cascade down the generations; but what concerns us is just how many younger buyers are prepared to stretch themselves well beyond traditional lending limits without arranging adequate financial protection. These were hypothetical responses and we fear that, under genuine pressure to realise their home-buying dreams, many more buyers will choose to walk the mortgage highwire without a financial safety net.
Find a best-buy mortgage
Regional variations
Regionally across the UK the research shows that people in Northern Ireland are the most risk conscious, with four out of 10 consumers stating that they would take out some Income Protection cover to cover the monthly cost of their mortgage, followed by homebuyers in East Anglia and Yorkshire. Consumers in Scotland, Wales and the South East are least likely to take out cover.
A major barrier towards taking out protection seems to be uncertainty about how much it costs. The research shows that over a third of peoples decision to take out Income Protection cover is based on how much it would cost.
However, a 30-year old non-smoking woman taking a mortgage of £187,048 with a monthly repayment of £1,252 would pay a monthly premium of just £19.53 for Income Protection Insurance, if she could not work due to long-term illness or injury.
Find a new mortgage deal
Snell said: A looser set of borrowing habits is taking root among younger generations of home-buyers. We understand the pressures and realities of todays housing market, but we urge young families and individuals to think very carefully before deciding to omit financial protection from their home-buying process.
Loading ...