Mortgage repayments cheaper than paying rent
April 26, 2011
It has been revealed recently that for the first time in many years it has become cheaper to buy a home and make mortgage repayments than to rent a home and pay monthly rent. For many years it has worked out cheaper for people on a monthly basis to pay rent than pay a mortgage, even though they will not own anything at the end of it all. However, after a very turbulent period in the property market this trend has now changed.
According to recent reports it is now, on average, around £100 per month cheaper to make mortgage repayments on a purchased home than the pay rent on a similar property. The average amount paid out on a mortgage for a three bedroom property these days in said to be £608 whereas the monthly rent on the same property would be £709. Just two years ago the mortgage on the same property would have been £1060 a month whereas the rent would have been £761 a month.
A number of factors are thought to be responsible for the change in costs between renting and buying. This includes the fact that soaring demand for rental properties has resulted in rental costs being driven up and also the fact that for over two years the base interest rate has been at a record low of just 0.5 percent, keeping mortgage repayments down.
One industry official said: “Such a marked decline in mortgage costs has improved affordability for those able to enter the market as well as helping to ease the pressure on existing home owners’ disposable income. Although the current trade-off between buying and renting is expected to narrow when interest rates start to rise again, the long-term benefits associated with investing in bricks and mortar are likely to ensure that buying will continue to be viewed favourably by many.”
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