Owning a home could be cheaper than renting in the UK
Owning a home could be cheaper than renting across the UK as first-time buyers could potentially save an average of £2,268 more than renters a year provided they can get on the housing ladder and afford the £51,000 deposit, research has found.
The study from Santander Mortgages weighed up the potential cost of home-owners’ monthly mortgage payments against what they could expect to pay out by renting.
Although there were potential savings to be made by being on the property ladder across the UK, the average first-time buyer deposit needed is £51,952, the study found.
Once on the property ladder, first-time buyers could expect their monthly mortgage repayments to come to £723 on average – compared with an average rent of £912 per household, saving an average of £189 a month – or £2,268 a year – compared with renters, the report found.
In London, the savings are potentially greater, with the average monthly rent £289 higher than monthly mortgage payments, adding up to a potential saving of nearly £3,500 per year. However, first-time buyers in London face raising £135,000 for a deposit, according to the calculations.
Santander found the smallest difference between rent and mortgage payments is in the East of England, at £43 per month – or just over £500 a year.
The research, which used average rents from the Homelet index and Office for National Statistics (ONS) house price figures, made several assumptions about a first-time buyer’s mortgage payments, including them having a 24% deposit, a mortgage rate of 2.48%, and be paying off what they owe over 25 years.
Managing director of mortgages at Santander UK, Miguel Sard said that buying a property is a major financial investment with up-front costs to consider, but long-term the financial benefits can be significant.
With annual savings averaging well over £2,000, this can really mount up over time and, of course, once the mortgage is paid off, there is a valuable asset to show for it.
Getting independent advice and looking for competitive rates, is crucial to get the right mortgage to meet potential home-owners individual needs.
This article is for information purposes only.
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