How getting on the property ladder saves money
Recent research carried out by the Halifax has revealed first time buyers are saving around £1,300 a year, compared to those who are renting.
Assuming first time buyers have a 10% deposit and considering all the costs incurred when buying a property – including saving for a deposit, mortgage payments, maintenance and insurance costs, the Halifax have found that on average, the monthly cost of running a standard three bedroom property is more than £100 cheaper than renting.
Despite the rise in house prices, increasingly competitive mortgage deals have helped drive down the price of owning your own property since the credit crunch began, when it was nearly £40 more expensive than renting. The report from the Halifax states:
"The significant fall in the monthly cost associated with buying compared to renting has been driven by the decline in the average mortgage rate since 2009. The mortgage rate for a first time buyer has fallen to an average of three per cent from 4.9 per cent in June 2009, helping to reduce the average monthly mortgage payment by £57 (8%).”
Although the monthly cost of buying a home has increased by £25 a month over the past year, the cost of renting has increased by an incredible £42 a month — costing renters an average £787 a month, according to the Halifax.
Surprisingly, the research also revealed that regionally it is more cost-effective to buy than rent in nearly all areas of the UK, including London, Wales and the West Midlands. One of the few regions where this may not be the case is the East Midlands, where first time buyers can still find a good rental price.
Joining the property ladder is more accessible than ever, through the availability of low-deposit mortgages from the Government’s Help to Buy scheme. Though stricter lending checks came into force in April 2014, buyers still need to be aware of the lending changes that will occur when the Bank of England base rate fluctuates.