As the cost of renting has gone up, and interest rates have gone down, it’s become a lot more affordable to buy property than to live as a tenant. Although buyers need to scrape together money for a deposit, once they’ve secured their mortgage and signed on the dotted line, they’ve generally found that their finances are in much better shape when the end of the month rolls around.
However, over the past year things have begun to change. According to @F_Reporter, “The gap between the cost of buying and renting is down 59% to its lowest level in almost a decade.” In some parts of the country, buyers are now just a few pounds better off every month than renters.
Why is the gap between renting and buying getting smaller?
There are a number of reasons why the financial gap between renting and buying is narrowing. For a start, house prices are continuing to go up faster than wages. This is forcing buyers to borrow ever larger amounts, which in turn translates into larger monthly mortgage repayments. What’s more, interest rates in the UK have started to creep up.
The Bank of England has set the current rate at 0.75%, which is still low by historical standards. However, many experts believe the rate will rise further in the coming years. As a result, a lot of banks are withdrawing their cheapest mortgages and offering less competitive deals in their place.
The picture around the UK
On average, it costs £729 a month for an owner-occupier to run a three-bed house, including the cost of a mortgage. Renters living in a similar property will pay around £759 a month, just £30 more than their property-owning counterparts. In Scotland however, things are a little better for buyers. Property owners save around 20% compared to renters. In addition, in Wales buyers are 14% better off.
In Yorkshire, the financial gains of buying are less pronounced. The county’s property owners save just 5% a year compared to renters. In Northern Ireland, things aren’t much better – with buying saving individuals just 7% compared to renting.
How to save more on your mortgage
Although the cost of buying is creeping up, there are still lots of great mortgage deals out there. Securing a good deal on a home loan will help to minimise your monthly outgoings and help ensure you have more cash left over at the end of every month.
Talk to an expert financial advisor to make sure you secure a loan that suits your needs and your finances. Get in touch with a member of our team today to find out more.
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Written by: Cambridge Web Marketing