Mortgage cheaper than rent?

Ok, one example I know of based on Rightmove and Santander prices today.

£100k for a 2 bed terrace house.

Rent is £800 a month.

A first time buyer mortage with a 5% deposit would get a fixed rate repayment mortgage of approx. £600 a month.

So this is cheaper to buy even when there is no equity - and the mortgage will only get cheaper over time as equity is built up.

Everybody knew even back in the 1980s that renting was more expensive than buying. The hard bit was always getting a deposit together.

We bought 10 years ago with a 5% deposit and our mortgage was approximately half of what we were paying in rent. Now, the rent of a similar property has increased significantly but our mortgage is roughly the same as it was originally.

If that's what you were actually asking then in my area you can buy a house for £220000 with 10% deposit over 22 years for about the same as renting the same house, if you extended the term to 35 years, buying would be cheaper per month, rent would also always increase.

One of the reasons we rented for so long was because it was much cheaper to rent the house we wanted in a good area than it would have cost us in mortgage payments. Obviously we were likely paying more than the landlord’s mortgage, but that’s not the same thing.

When we bought our current house, similar size and probably similar value to buy as our rental, we paid £1250 mortgage compared to £950 rent.

A lot of people being very disingenuous that their mortgage is £x and a similar house would rent for more, the question is “would it be cheaper for a first time buyer with a normal deposit to buy” not, “did you buy your house a long time ago so could now make a killing in rent”.

When I bought 16 years ago my half of a £900 mortgage in southern commuter town was a lot less than the rent on a double bedroom in fancy famous university town houseshare I had been paying. My wage was low so it made a huge difference despite having to commute to uni town for work.

We have nearly paid the mortgage off now and house has increased in price, was very lucky to get on the housing ladder at the time.

It's not at all short-sighted.

Many people are trapped in a loop of not being able to save £20-30k for a deposit whilst spending thousands on rent payments, year on year. But the total money accrued in rent payments does not, in the bank's eyes, make you responsible to lend to.

For example, my DP and I paid ~£1.5k a month in rent in London for 10 years, totalling around £180k. But if we don't have a wedge of cash in the bank, I can't buy a house. I think the fact we've paid nearly £200k in rent means we can be trusted to pay a mortgage off.

But you haven't factored in service charges, ground rent and maintenance costs so the rental will be quite a bit less per month than the purchase.

My house which we moved out of as we moved area for work costs us £750pcm in mortgage (will go up considerably at the end of the summer when 5 year fixed rate ends) and our tenant are paying £1300 pcm to live in it.
We had a 10% deposit and it’s worth around £280,000 in the midlands.
We are now paying £1500 a month for a two bed flat.

Depends where you live. DS was paying £1000 a month for a crappy one bed flat in Surrey. He's just bought a lovely three bed house in Wales at the edge of a national park and pays £800 a month. This will be going steadily down and he'll eventually own it.

It really is true. We’ve gone one bed flat (£700 rent) to 3 bed house (£686 mortgage). Five minute walk between them. That was 4.5 years ago. I’m about to remortgage at £705 and that flat went up last year for £950.

10% deposit, 25 year mortgage, South Sefton (Merseyside).

House has three double bedrooms and two reception rooms. Flat had one bedroom and one reception room.

I don’t get why OP thinks it isn’t true.

Yes true for me I paid, 1200 rent only pay 500 mortgage

Very much true here - renting similar house on estate about £1200 - mortgage about £550

Very dependant probably on country and location. Prior to 2008 when house prices were high where I am a mortgage repayment was in general as cheap as if not cheaper than rent and in fact the 100% mortgages that were available then were introduced to enable people who were renting and couldn't save buy a house, because they were already paying the repayment amount monthly in rent it enabled them get a mortgage without also having to try save a deposit.

Rents are extremely high now so I'm not surprised mortgages would be cheaper in many cases but these days deposit will have to be saved before mortgage so an awful trap for some people.

Rent may be more expensive, but you also have no repairing obligations. When the roof costs £20,000 to fix, a homeowner will be paying that. So your "saving" of £200 per month is very quickly swallowed if you are paying out for repairs and maintenance. Yes, you have an asset once the mortgage is eventually paid off or paid down. But you also have a liability, whereas you have none with renting.

So your whole point about the thread is that if you get 100% mortgage somehow as a landlord (don't think thats possible) you would be paying temporarily more than someone would be paying to rent the house... I mean that's been the case most the time for many years and something you have to accept if you want to be a landlord

What is the point of your thread/what are you hoping to find out if YABU about?

There's no point in comparing "Oooo bought 8 years ago so it's cheaper" to today's rents.

The relevant questions are:

(1) for someone making the buy/vs rent decision today on the same house or directly equivalent houses, is it cheaper to rent or buy? That then brings in questions like over what time period do they expect to be in that home, do they have a deposit, and if so what return could they get on the deposit by investing it instead?

(2) for someone who owns a property they don't need to live in, are they better off renting it out or selling it? That then brings in questions like local wages and demand, other overheads of landlording, capital commitment, how long before they need an income and so on.

It's entirely possible that even though renting is more expensive than buying over 10 years person A is better off renting for 3 years than buying and selling over a short period than being hit with stamp duty and maintenance that mostly benefits the next owner.

Similarly, it's entirely possible that since the cap on both mortgage and rent is the occupiers' affordability, a landlord looking at a 10+ year investment is happy to rent at a loss at first to secure the property at today's price, knowing over time she can increase the rent as inflation pushes up wages.

Depends on the type of house, the postcode I live in a 3 bedroom semi-detached house is between approx. £1,000 to £1,350 to rent. Prices to buy for a semi-detached are around £230,000 to £270,000. Putting the figures into Right Move to buy the £270,000 semi with a £10,000 deposit would cost you approx. about £1,200 in mortgage payments.

95% mortgage, went in last year at top end rates of £1003 pm. A house 2 doors up just went for £1100.

It is almost always the case that you might not make instant profit from day one, but several years down the line, the mortgage will be cheaper than rent. So what is the actual point you are trying to make on this thread