Rent is more expensive than a mortgage in UK

January 8, 2016 by Brendan

Property Market

As mortgage interest rates stay at their lowest for many years and the cost of rents increase, many people are finding that it is cheaper to pay a mortgage than rent.

Recent research has discovered that paying a mortgage is cheaper than paying rent for a property, even if the mortgage is for a large amount. In the UK, the average rent paid is £995 a month, while a first time buyer would pay an average of £805 a month. This figure is based on a first time buyer putting down a 21% deposit, leaving just 79% of the total amount to borrow. The amount which can be saved by paying a mortgage as opposed to renting is £2,300 a year. However, these calculations don’t take into account the cost of repairs and general upkeep of a property.

The largest rents can be located in the south west of England, making a mortgage payment £192 a month cheaper than renting a property in that area. In London, you will pay £179 extra every month to rent a property. The cost of a mortgage and monthly rents are the most similar in the east of England, where having a mortgage will save you just £2 a month.

The research was conducted by Santander. According to its findings, the average price paid by a first time buyer is £212,610. Although a 21% deposit would be £44,648 on a house at this price, the amount could be lowered if the buyer takes advantage of one of the schemes launched to help first time buyers, such as the Help to Buy scheme. Before making the decision to buy a property, a mortgage adviser who has studied CeMAP will be able to help you make the most suitable decision.