Mortgage cheaper than rent?

It really depends on a number of factors:

The reason why someone could be paying a higher rent than if they took out a mortgage, is because they haven't got a deposit saved, and therefore can only rent.

It also depends on location. Properties in london are expensive therefore it's easier to rent than buy. However if you have decent deposit your morgage could be lower than paying rent.

Mortgages are also higher now than during covid - at around 3 plus % atleast. 3.75% being the Bank of England base rate currently - with the ongoing war, this could look to get higher.

It all really depends..... in the long run, if you can try and save for a deposit and buy, that would be the best financial long term plan - as then you build equity in your own place rather than your landlords.

It would’ve been true for us if we’d have bought before Liz Truss got in and got a fixed rate. Small deprived town in the North-West and I’d say it was relevantly normal to rush into a mortgage as it was cheaper than rent.

Now we are looking at a mortgage being £800 per month whilst our rent is currently £500. I’m not sure how much of that is due to interest rates rather than natural house price increases
though.

It is perfectly rational to let a property and lose money in the early stages, but be profitable in the long term.

Much of the profit comes from the increase in value of the property over time. Over the long term, property values in the UK tend to increase significantly, despite periodic fluctuations.

In addition, parts of the early costs, such as mortgage, remain fixed whilst rent over the long term, tend to rise, so properties become more profitable.

If a landlord with multiple properties has a portfolio of established rentals which generate profit, these can be used to subsidise new rentals. And yes, 100% mortgages are largely a thing of the past, particularly in the Buy to Let market, but releasing equity from established properties as their value increases pays for deposits on subsequent properties.

My mortgage is £800 per month, next door is rented at £1450 per month - both are terraced townhouses with 3 bedrooms. One of my DC has a booking for private student halls in Sept which works out as approx £1256 per month 😳 (uni owned halls only for 1st years, we are hoping she’ll manage to get a house share as that’ll “only” be £800-£1000 a month 😭

Well it's very much true for me.

My mortgage is £600 and we overpay another £600.
Next door rent for £1200.

3 bedroom house. I used to live in a studio flat 2018-2021, it was £550 pcm and went up to £675 when I left.

My friend is paying £900 for a one bed house rental in the same area I live.

So it's very true for us.

This article suggests on average there isn't much in it. moneyweek.com/investments/property/buying-vs-renting-which-is-cheaper It really depends on what the rental market is like and what the housing buying market is like in your area. In the very long run a mortgage will be cheaper than rent as you end up with a house at the end of it.

I was paying £1650 rent for a two-bed flat in a run-down road with no garden in 2023/4, my mortgage is £1750 so no, not cheaper, but we are in a house with a garden in a much nicer road, and renting this would be more like £2k. Homeowning comes with additional expenses such as repairs, maintainence etc so in general I have found renting cheaper in the short term than having a mortgage - and where the landlord already owns the property outright as is often the case or where they have a small mortgage due to having paid it off there can be a huge difference between the mortgage/costs to the owner and the rental price.

Properties on our street are approx £280k.

Rentals in our row of terraces are approx £1300pcm.

Our mortgage is £800pcm.

YANBU

It depends on the property but it can definitely be true

I pay £2.3k a month in rent but to buy the flat would be £450k so the mortgage would be 2.3k plus £3k a year service charge, maintenance, stamp duty, legal fees etc then lost investment gains on the deposit. It would take years to break even.

If you are comparing a different property or your neighbours rent now to a property you bought years ago then yes a mortgage will be cheaper but there are circumstances where renting is cheaper.

Believing that buying is always better is what gets people into negative equity

All depends where you live and what mortgage you have 🤷🏼‍♀️ I pay 495 for my mortgage a month but there's similar houses nearby up for rent about £300 more a month

Why do you think it is not true?

In my postcode you could buy a 3 bed, 2 reception, 1 bathroom terraced house with a garden for £175,000. This could be around £800 a month repayment.

£1,200 is the cheapest rent per calendar month for the same size home in the same area.

Our mortgage is cheaper as we bought in 2010, there's no way we could afford to pay the level of rent required these days.

I'm in central Scotland in a flat, others in my block have sold for approx £50k.

Just ran through the figures on Compare the Market, for a £50k mortgage, 0 deposit for 25 years, fixed for 3 years.

It's offered me £280.46 per month with Lloyds. My rent has just gone up to £93 to the COUNCIL. As I get 4 free weeks per year, that works out as £372 per month, or over £100 per month less.

My DD was looking to rent a house at a cost of €1,800pm (Ireland). She bought in the same area instead and her mortgage is €1,000pm. There's a house in my locality for rent at €2,650pm (for a 3 bed semi!!!). A mortgage on the same house would be around €1,200.

But it would be for most if not all LL if they make a loss year on year, meaning that without charging sufficient money for a LL to cover a typical mortgage, to fund repairs etc and to make a profit it's impossible for renting to be cheaper than buying.

My wife's youngest was working for NMW & paying about £500/month for a one bedroom flat. He rented for five years paying about £30,000 in total because he couldn't get a mortgage. He moved to a higher paid job & was then able to buy his own much nicer one bedroom flat with a 10% deposit & is now paying around the same in mortgage repayments as he was in rent.

I just remembered that shortly after he moved in the guy renting an identical flat across the hallways was given a Section 21 & the flat advertised at £800/month

I have read that older people on the aged pension are better off if they own their own home.

Think it depends if they get a council/HA housing it may be better off not owning with risks of upkeep of owned house. Swing and roundabouts.

Pirvate rental vs homeowning then I think it's clearer homeowning is better though again depends on paying off mortage before retirement is is in some area happening less often than once did.

I thought it better we owned post retirment but then expect my pension to be low - so not having a large bill every month and an asset can potentailly exchange for a cheaper one freeing up capital seems sensible. Plus we may still get a few years mortage free before retirement and that extra can go to savings.

My friend just bought a house which is £100 a month cheaper than renting. The new house they purchased is a bit bigger than the rental and nicer all round. She did a 100% mortgage in the end too, so cant even say its because the deposit was large.

I live in a 3 bed terrace, my mortgage is £670, the house 2 doors up which is identical to mine rents for £1200. I only paid a £12k deposit and Ive been paying the mortgage off for 10 years. So even if you added on £1.2k each year to cover the deposit, owning is much much cheaper. Im in Manchester, so not some random place in the middle of nowhere!

We pay £750 a month mortgage on our 4 bed detached home. My next door neighbour used to rent her 3 bed detached home for £770. She had the opportunity to buy it and took it.

So you agree it's not a sustainable business model long term.

Thus defeating your point.

We bought our end terraced house in 2021 and even after the disastrous Truss budget, our mortgage is still over £100 less than the rent on the almost identical end terrace on the next block. It very much depends where you live, but rents in our Lancashire town have jumped massively in the last few years and families are struggling as a result.

True in my area. Houses £1200+ to rent, my mortgage £850

Rent here is around £800-£1000 a month. My mortgage is £500pm… but when you factor in deposit then yeah not cheaper until further down the line I suppose but at least the money is still mine with a mortgage