Spend no more than 20% of wage on loans
Published On 30 January 2007
Responsible borrowers should spend no more than 20 per cent of their take-home pay on paying back any loans or mortgages they may have.This is the advice of the Consumer Credit Counselling Service (CCCS) with regard to the recent survey from Yorkshire Bank showing that 60 per cent of consumers would consider a mortgage where thy had to borrow five times their salary.
A number of debt groups, including the CCCS, have expressed concern at this survey feeling it may convince consumers to pursue overly high levels of debt.
Joel Lewis, CCCS spokesperson, spoke about whether first time buyers understand the full implications of a larger loan over 25 years.
He said: "As a rule of thumb, if you take all your commitments for unsecured credit (i.e. personal loans, credit cards, store cards etc) and it comes to more than 20 per cent of your take-home pay then you are probably over-extended and should seek advice on handling your debts before doing anything else."
