Buying Is Less Expensive Than Renting A Home
Taking on a mortgage at any time in your life is a huge financial commitment but it is often more so for first time buyers. One of the reasons for this is that when you first buy a property you are usually required to find a significant sum as a deposit to purchase the property. So, how does the monthly cost of buying a home compare with renting a property here in the UK for someone taking on his or her first property?
Well, some research has been carried out by Santander that provides residential mortgages here in the UK. Below we provide some of the information that the bank has produced that we trust you will find of interest.
The average price paid by a first time buyer to purchase a home here in the UK was £213,462. The average deposit contributed by a first time buyer was £51,905. Therefore, the average first time buyer mortgage was £161,557. The average amount paid per month in mortgage repayments by a first time buyer was £723. The average amount paid per month in rent was £912. Therefore, a first time buyer would on average save £189 per month by purchasing a property rather than renting one. We are sure that you will agree that is a huge difference.
It probably does not come as a surprise to a lot of people to read that if you look at the figures for London this part of the UK shows the greatest difference in the amount paid by first time buyers when comparing mortgage repayments with rent. The average first time buyer house price in London was £420,500 with the average deposit paid by a first time buyer being £134,660. This means that the average first time buyer mortgage in London was £285,840. The average monthly mortgage repayment for a first time buyer in London was £1,280 whereas the average amount paid in rent was £1,569. That is a difference of £289 per month – a significant sum of money.
Of course, it should be borne in mind that the purchase of a property is a potential investment that has the opportunity to hopefully increase in value over a period of time whereas a rental property does not provide such a potential benefit. If you are considering buying your own home then do bear in mind that there are numerous lenders offering mortgages so you may wish to shop around with a view to obtaining a competitive lending package.