Mortgage cheaper than rent?

Of course it's 'a fair comparison's' it's the only comparison you can do. It's a 'generally' thing not an in each scenario thing.

6 identical house here, 4 rented, 2 owner occupied. Renters are paying 2x my mortgage. Other owner paid her mortgage off.

it only matters in your own individual situation, but yes, mortgages are usually much cheaper than rent as rent covers a lot more than just a mortgage payment. Are their monthly outgoings in their house more than mine, probably not much. But I have security they don't have & my asset is increasing.

REALLY need the laugh emoji back

that you can rent out a house for more than the mortgage costs

A BTL mortgage is much more expensive than a homeowner mortgage so if you are comparing those with costs of rental the answer may well differ.

Whoops, sorry....bit missed off....

Everyone: Still not cheaper
OP: I can't explain again what I mean.

It just totally depends on area, interest rate, size of deposit etc - way too many variables to say definitively one way or the other. It is true that rising interest rates and years of house price increases plus maintenance on top means those with smaller deposits or in expensive areas may be better off renting and investing their money rather than tying up in property (which is a bit of a cultural / mindset shift than the buy-at-all-costs mentality we have in the UK)

Mine and my daughters mortgages are all below £350 a month. The cheapest house in the same areas as my daughters to rent are £550+ a month. My area would be £1000+ a month

(I’m now wasting too much time time on rightmove - I have picked two potential new properties should I win the euromillions tomorrow evening.)

Ooh @limeandwater- you encouraged me to go check as there’s a posh block of flats near us and there’s a flat for sale and a flat for rent in same building. Assuming a 10% deposit and 25 year mortgage, it would cost you £2,005 a month to buy and the flat is for rent for £2,150 a month. They aren’t an exact comparison- while looks like same layout/sq footage, the one for rent has a balcony that is both north facing and facing the road, whereas the one for sale has a south east facing balcony which is facing the garden/neighbours garden. I would therefore assume the rented one would be slightly cheaper to buy if it came up for sale.

In our area, there doesn’t seem to be a lot of property for rent, so I guess the local supply and demand will really effect the rental prices.

OP: Is mortgage cheaper than rent?
Everyone: Yes
OP: Sadly it doesn't work like that.
Everyone: Yes it does.
OP: You're wrong.
Everyone: It's definitely cheaper.
OP: Well that's not what I asked.

🙄

Mine is higher because we got a short term (10 year) mortgage with the aim of being mortgage free by the time the kids finish school. If we'd got a longer term it would definitely be cheaper than renting.

Because the government are piling on obligations and costs on landlords. That’s why so many are exiting the market place. You have to have deep pockets and a very very substantial deposit to break even. Forget it even with 30% these days.

I thought that was the whole point of buy to let?

I haven’t read the whole thread. I’m a landlord. The fairest comparison imo would be to calculate the mortgage cost on an interest only basis for 100% value (ie renting money) plus mortgage arrangement fees, solicitors and estate agent fees when selling, which is basically what an owner would have to do.

Total owner occupier cost - 292k
Monthly interest only mortgage at maybe 5% - you’re not getting good deals here as it’s a big risk - 1218
For this, you have to pay all repairs, buildings insurance, boiler maintenance, servicing, redecoration etc so maybe another - 130 a month if you’re lucky and everything is brand new - 1348

My rents for long term tenants are lower at 1200. I have a new tenant paying 1400.

I get far less than this once my costs are deducted. I have a lot more obligations than an owner occupier and tax to pay. Plus I have the risk of non payers, court and eviction fees etc.

In the short to medium term, it would therefore be cheaper for me to be an owner occupier. Who knows after 10 years. Most people will have moved on from the property.

It used to be very true, then house prices rose and it is no longer straightforward.

My second house mortgage was around £200 per month. Rent would have been around £350 and that was pretty standard.

For a while it seemed to reverse, but now rents seem to be going up and catching up with house prices. The only thing that doesn't seem to be catching up is the local housing allowance for people on benefits when are priced out.

Current house rent £509, mortgage £600.

Mums house worth around £150- £175k, neighbours rent with less bedrooms for £650 so renting is back to being more expensive. A few years ago the renters were paying nearer £400.

Yes it’s true. A landlord buys a property at a higher rate than a residential mortgage and has to factor in many costs - estate agent fees, gas and electrical certificates, maintenance, insurance, sinking fund for redecoration and boiler replacement. So rent has to include all of this.

Someone with a mortgage and someone renting in the same area however will spend the same as these costs still stand if you have a mortgage on your property.

Its like an all inclusive compared to a bed and breakfast.

Also increasing prices mean mortgages become cheaper quite quickly after you’ve had a property for a few years.

I pay £1200 pcm rent. Flats in my building are worth £120-130k. Apparently a monthly mortgage with a 10% deposit would be around £500. So yes, my rent is more expensive.

It completely depends on the mortgage interest rate, mortgage length and size of deposit in terms of monthly payments and what length of time you want to do the comparison for, but for example in my area a 3 bed terrace is about 300k, on the same street a rental for a near identical property is £1400 a month.

The way I think about it is if you rented for 70 years (Ages 25 to 85) you would pay £1400 x 12 months x 70 years which would be £1,176,000 in total. This isn't even taking into account the fact that the monthly rent would most definitely increase over that length of time. Clearly this is a lot more than you would pay over a mortgage term even with a high interest rate and a deposit. In addition you would own the property at the end of the mortgage, which most likely will have increased in value, potentially to the point it may be worth more than the total cost of the mortgage to purchase the property, so you may eventually break even or be in profit by the time you sell.

Even taking into account stamp duty, repair costs etc for renting vs owning and buying with a mortgage ultimately will be significantly cheaper in the long run.

The best option though will surely depend on your personal situation, if you need to relocate fairly often if may not make sense to purchase with a mortgage every time especially if you are at risk of paying early repayment charges etc so its great that renting exists as an alternative.

Mortgage £401. House next foor pays £900 rent..For exact same house. Just bought at the right time