Buying is cheaper than renting!
A recent study has found that buying a property is cheaper than renting in every region of the UK.
According to a report commissioned by Santander Mortgages, £995 is now the average monthly rent in the UK compared to average monthly mortgage repayments of £805 for first-time buyers, meaning homeowners can typically make a saving over tenants of £190 a month or £2,300 a year.
In the South-west average monthly rents exceed mortgage payments by more than £192 so prospective first-time buyers there can potentially make the biggest monthly savings by switching from renting to property ownership.
First-time buyers in London, where rental prices are 56 per cent higher than the UK average, would be £179 a month better off.
At the other end of the scale are those living in the east of England, where typical first-time buyer monthly mortgage payments exceed average rents by only £2.
Santander UK managing director of mortgages Miguel Sand says: “People assume that buying a property will put them under greater financial pressure but often the reverse is true. With annual savings averaging well over £2,000, this can really mount up over time and, of course, once the mortgage is paid off, you have a valuable asset to show for it.
“Many prospective first-time buyers see the cost of saving for a deposit as prohibitive but there are many deals available for smaller deposits.
Buying a property is a big financial commitment and there are upfront costs to consider, but over the long term the financial benefits can be very significant. Getting independent advice and looking for competitive rates, either online or through a mortgage advisor, is crucial to get the best mortgage to meet potential homeowners’ individual needs.”
As well as capital growth over time, homeowners appear to be paying less out each month to live in their property compared with those renting. Buying is therefore a win win situation.
While this research suggests that the average deposit is 21 per cent, the popularity of government schemes such s Help to Buy proves that there are plenty of people with more modest deposits who are keen to buy.
Post courtesy of Mortgage Strategy.