First time buyers are overstretched and under protected

Nearly half (48 per cent)1 of first time buyers (FTBs) would only be able to meet their mortgage repayments for six months if they lost their regular income tomorrow, reveals new research by Post Office® Financial Services.

With the average house deposit now at GBP 11,710,2 many FTBs are left overstretched financially. A third then face the additional shock of household running costs,3 which are much higher than they expected.

The Post Office® research reveals that despite these financial pressures, many FTBs are skimping on protecting themselves. Almost half (45 per cent)1 of FTBs don’t have any kind of protection against loss of income, from accident, sickness or unemployment (Payment Protection Insurance). Of those who are unprotected, the majority (44 per cent)1 have avoided doing so because they think it’s too expensive. Almost a third just don’t think they need it.

Worryingly, at least one in five FTBs (21 per cent)1 say they would rely on friends and family to help them pay their mortgage if they couldn’t work. One in 20 admit they would have to sell their house in this event.

Post Office® Head of Marketing, Claire Oldstein, said: "First time buyers tend to overstretch themselves, but need to consider what they would do if they lost their income. It’s unlikely they will have a big enough rainy day fund to rely on – especially after pulling together a deposit."

The Post Office® is urging FTBs to think seriously about protecting themselves because it’s not as expensive as they may think. With Post Office® Lifestyle Protection FTBs can cover their mortgage repayments and additional monthly outgoings (up to 60 per cent of their gross monthly salary) for just GBP 4.50 per GBP 100 of cover.

Claire Oldstein continued: "Protecting yourself may seem another unwelcome expense but it could actually be money well spent should the unexpected happen. Lifestyle Protection is one of the cheapest and most flexible forms of payment protection on the market, not just for mortgages, but for credit cards and loans too."

Homeowners with existing payment protection policies could also save money by switching their policy to Post Office®. For example homeowners with a monthly mortgage repayment of GBP 750 could save over GBP 854 each year by switching their PPI policy to the Post Office®.

Lifestyle Protection has been designed to offer customers a fair deal, responding specifically to the negativity surrounding overpriced PPI cover, as outlined by Citizens Advice in its "Protection Racket" paper. 5

ENDS

Notes to editors

Product details:
. Covers monthly outgoings for up to 12 months if unable to work because of accident, sickness or unemployment plus life benefit of 12 times monthly benefit
. Sickness cover includes back and stress conditions (after first month, specialist evidence required from consultant)
. Only GBP 4.50 per GBP 100 of cover per month (inclusive of Insurance Premium Tax)
. Can insure between GBP 100 – GBP 2,500 a month (up to 60% of gross monthly income)
. Payments backdated to day one for accident, sickness or unemployment (subject to 30 day waiting period)
. Cover can be paid direct into customer’s bank account
. Available at www.postoffice.co.uk or by calling 0800 633 5967

Lifestyle Protection is underwritten by AXA Insurance UK plc, Registered in England No. 78950, and AXA Sun Life plc, Registered in England No. 3291349. Registered Offices: 5 Old Broad Street, London EC2N 1AD. Both authorised and regulated by the Financial Services Authority. Terms, conditions, exclusions and limitations apply, and full copy of the policy wording and complaints procedure is available on request or by visiting www.postoffice.co.uk.

1 Based on a survey of 1364 people, conducted by Experian July 2006
2 Alliance & Leicester, July 2006
3 Running costs taken to mean, council tax, insurance, mortgage, bills, TV license etc.
4 Saving based on average cost of Mortgage PPI compared with cost of Lifestyle Protection
5 For a full copy of the Citizens Advice "Protection Racket" report, visit: http://www.citizensadvice.org.uk/protection_racket_summary__final_sept_05.pdf

For more information please contact:
Hayley Fowell
Royal Mail Press Office
020 7250 2468
148 Old Street
London
EC1V 9HQ
[email protected]

www.postoffice.co.uk