In every single region of Great Britain, it is now cheaper to make monthly mortgage payments than to pay rent – even where homeowners have huge loans.
In the UK the average amount paid for rent is now £995 per household, compared to an average monthly mortgage repayment of £805 for first-time buyer households. The latter figure is based on the average first-time borrower’s deposit of 21% – meaning that they have a mortgage of 79% of the property’s price.
Over the course of a year the average total savings for mortgaged homeowners adds up to £2,300 per household.
The South West of England faces the highest rental ‘premium’, with the average mortgage repayment is a hefty £192 per month cheaper than the cost of renting. In London, the divide is also high with tenants paying an extra £179 per month for renting a property.
The East of England is on the closer side of things, where rental and mortgage prices are the most similar, with the average mortgage repayment being just £2 cheaper.
Bright Advice – Mortgage Broker St Neots
The research was done by mortgage lender Santander, they found that the average first-time buyer house price to be £212,610. A buyer with the average 21% deposit would require a £44,648 deposit in order to be able to make the leap from tenant to homeowner.
However, if you were to use a Help to Buy equity loan or mortgage guarantee, the figure could drop to as little as 5%, or just £10,630 – just over £5,300 each if split between a couple.
Miguel Sard, managing director of mortgages at Santander UK, said: “People assume that buying a property will put them under greater financial pressure, but often the reverse is true.
“With annual savings [of buying versus renting] averaging well over £2,000, this can really mount up over time and once the mortgage is repaid you have a valuable asset to show for it.”
Your home may be repossessed if you do not keep up repayments on your mortgage.