The difference between mortgage repayments and rental payments is an area of interest for many. Indeed, those looking to buy will often consider whether it is cheaper to rent or to buy, so they can choose the best deal.
Many would-be homeowners will now be pleased to know it is cheaper to buy than it is to rent. This revelation comes courtesy of research done by Santander Mortgages.
Average monthly rent is compared to average monthly mortgage payment
The research has taken the average amount paid out for rent in the UK and compared it to the average amount a first-time mortgage will cost each month. It found the average rent currently stands at £995, while the average monthly repayment for a first-time buyer’s mortgage will be significantly lower, at £805. This represents a saving of £190 every month. Over the course of a year it adds up to £2,300.
Which regions of the UK fare best?
The difference between mortgage repayments and rent payments differs considerably depending on which region you look at. While the average works out as given above, some areas of the UK fare considerably better than others with regard to the differences between the two.
For example, those living in the south-west of England will see the biggest difference between the two figures. The average house price there is £187,416. Assuming a 21% deposit is made on the property and the average cost of a mortgage is taken into account (as is the case with all these figures), the monthly mortgage payment would be £710. Research found the average rent in that area would be significantly higher at £902.
Perhaps surprisingly, Greater London is next on the list in terms of savings. Even with an average property price of £363,555 and a monthly mortgage payment of £1,376, this still compares favourably to a rental payment of £1,555.
Which regions of the UK see little difference between renting and buying?
First-time buyers living in the east of England will see little difference between buying or renting. The average house price there is £212,610, with a mortgage repayment of £805 monthly. This compares to an average rental bill of £816 – just £2 difference. Next on the list is the south-east. The difference here is just £28, as rental payments of £959 compare to a mortgage payment of £931.
However, perhaps the most notable fact is that every single region, including Scotland and Wales, now offers the chance to buy property more cheaply than it could be rented.
Of course, there will be differences locally depending on the size of property bought and the particular rental deals available. Yet once again, taking averages into account does produce a rather interesting picture. Those that have a decent deposit put to one side (21% according to the research and figures provided by Santander Mortgages) do have a chance to save money by buying instead of renting. The main challenge, however, is getting that deposit in the first place.