Home buyers breaking investment ‘rules’

Ambition and pride is driving more people into breaking one of the established rules of house buying, says a local expert.

Figures show that just under 40 percent of homeownersare committing more than a third of their salaries to purchasing their properties.

Household debt is at an all-time high but, despite this, people are still willing to take this risk to realise home ownership and improvements.

This goes against recommendations centring around the 28 per cent rule, which states that you should not dedicate more than this amount of your gross monthly income on your rent or mortgage.

People are paying cash for 55% of the cost of modifications and improvements to their properties, and reaching for their credit cards, bank loans and financial schemes as a way of funding the remaining 45%.

While they are using debt to pay for upgrades to their homes, it’s seen as in investment for their futures and those of their families.

These figures emerged from a major research project undertaken by leading marketing communications agency Cogent.

Psychologist Prof Richard Crisp of Durham University, who contributed to the report, was not surprised by the relatively large financial commitments.

He said: “When it comes to our sense of identity, our homes are absolutely key. They satisfy deeply centred drives toward safety and security, they are the culmination of life goals and aspirations.

“They are also the stylistic expression of who we are. With such immense psychological value, people’s willingness to invest in them is quite understandable.”