Mortgage cheaper than rent?

It’s the experience of everyone I know who has bought that their mortgage payments have been significantly cheaper than renting would have been at the time.

Once you factor in refurb and maintenance costs it does even out.

When I first bought I think my overall costs would have been about 1/3 of the cost of renting, as rates were at a record low. With the recent increases it’s about 2/3s.

But I have a small mortgage - thanks to buying a small cheap place not because I had a huge deposit - so imagine that for people with larger properties that disparity is smaller.

My mortgage on a 3 bed house is £440 a month the same rent in the area for a similar house would be £1000-1200.

my house would sell for about £250k, assuming a mortgage of £200k repayments would be about £1300 a month. So if I was to buy now mortgage and rent but be not far apart but I would be building equity and at the end I’d own a house.

It would still be cheaper, obviously, to buy in the vast, vast majority of cases, even on 100% mortgages.

I've just had a quick look on Rightmove at rental properties in our immediate area.

The cheapest rental for same size/number of bedrooms etc is £2125 per month.
The most similar rental to our house is £2300 per month.
Our mortgage is £1100 per month.

It is true for us.

I've just looked on Rightmove and a 3-4 bed house is around £350k, mortgage repayments would be about £1500 a month according to their calculator.
A 3-4 bed house to rent is around £1800-£2200 a month.

I had a quick look at two bed flats in a particular area. To rent was £2500 a month. To buy was £2300 a month. Deposit of £27.000. There would be costs to buy, but also costs to rent- deposit, some months rent in advance, so a reasonable comparison.

If this has been your business for 21 years @limeandwater than I really worry a bit.

You can't "exclude a deposit" from the realities of what people pay today.

Very few people are doing 100% mortgages out there. Who do you know that is doing this?

Let's get statistical for a minute:

Mortgages with >95% loan-to-value (LTV)* *make up only 0.5% of all lending

Actual 100% mortgages are not even separately reported in official statistics!

So why should we indulge you with this fantasy of working out what a mortgage would be on a £500k property, when NO ONE is doing this?

The reality of the UK is we've become a nation where parents are passing down wealth to 'children' in their 30s and 40s and giving them a chance at a bigger property to sustain their family.

You can't just factor this out to try and create a like-for-like situation here.

Yes a mortgage will work out cheaper but not always immediately. For example… I bought my house 5 years ago. Mortgage is £1900 and the same to rent at that time was around £1600.
Now… my mortgage is still £1900 but rentals of the same size/spec are around £2200. So considerably more expensive.

Apartments are very different though. You could easily be paying less onna mortgage almost immediately. We were looking at a potential buy to let and it’s quite shocking.

On my street a semi-detached house is for sale for £225k
It'd probably need some modernising but is livable and functional - just not grey.

Monthly repayments
£1,027
Property: £ 225,000
Deposit: £ 22,500
Interest rate: 4.5%
Term: 30 years

To rent:

A room in a shared house is £650 pcm

A 3 bed terrace
£1,150 pcm

A 3 bed semi
£1,200 pcm

You're failing to account for the increase in property value.

Not really.

The need to lay your hands on a deposit all at once to buy a house is a barrier to having cheaper housing over your lifetime certainly, but it's not spent money in the same way that rent is.

Unlike rent, the deposit and the capital repayments don't take wealth away (unless the house value falls). Rather, you swap owning cash for owning an asset (housing equity).

With a repayment mortgage, only the mortgage interest is spent money. Whereas with rent, the whole amount is spent. So really the comparison isn't mortgage vs rent, it's mortgage interest versus rent.

Or as someone once neatly put it, "You can rent a house or rent the money to buy a house"

It also depends on decor or state. Most rentals here are magnolia, mouldy and manky kitchens but rent is still high.

Most homes to buy are in a nicer state. Even if on the same road or in the same terrace

(But that's local to me. Specifically)

Why don't you go on Rightmove, see what a 3 bed house rents for, find a house for sale on the same street and put it in a mortgage calculator (assuming 10% deposit, which is pretty standard)? There's no point asking here, people have all got different personal circumstances.

My son is paying 1100 for his mortgage 3 bed 2 bath house with double drive

to rent the same house would be around 1800 maybe more

House is worth 320 he put down 100k deposit

you can’t buy a house where we live for 220k

might just get you a two bed flat if your lucky but it would be tiny

rent a two bed flat depending on if your very central or further out can be anything from 1400 - 2500

the answer surely is “it depends”? Which area, how much equity, mortgage interest rate

My house would cost many times my mortgage to rent, but that’s because I have lots of equity and a low mortgage on a high priced property in a desirable area.

If I was mortgaging the same property without equity to, say, 95%, then renting it might well be cheaper

Our mortgage is £750 and it would cost between £1000-1300 rent pm for a similar property, according to Rightmove.

Properties in our postcode sell for 180-330k (long street with lots of different types of housing.)

Not many landlords would be making a profit if rent was cheaper than a mortgage. Some people will pay a mortgage higher than the local rent price but many pay less on a mortgage.

Yes it’s cheaper

Plus with Mortgage you generally are always ahead of the game. And even if it’s the same the day you take out mortgage ie rent in 2020 might have cost £1000 and mortgage £900 so even ish, by 2025 that mortgage is likely £900 still, whilst the rent now £1500.

With mortgage you can over pay, or save deposit to eventually pay off. Rent just goes up and you are still paying as pensioners.

Our house we bought 8 ish year ago ( not uk). The area we bought in was cheap. Rent was still higher than mortgage but not much. Now 8 years on, our mortgage payments remain around the same, yet house prices have trebled. So rental costs are now trebled. We could not afford to still live in area if we rented. Whilst our mortgage remains affordable, and w have a huge asset if we ever choose to sale

It's true for me.
£850 mortgage
House opposite was just rented for £1250 pcm

My rent was £2,200 a month - nice, but studio flat
My mortgage now is £2,300 a month for 3 bed house.

@EnglishBreakfastTea1 because the risk if you not paying your monthly rent is born by your landlord not the bank.

For me it was. Before I bought my first flat I was paying £600/month rent, my mortgage repayments were £200 (15 years ago & in the North, hence both figures being low).

When you rent, you pay for the service of someone else managing repairs, redecorating & replacing. Whereas when you own you save the cost of the middle man buy booking your own tradesmen, and even more if you do your own decorating and are OK with patching up a dated kitchen.

rent for my house would be around £1500, we pay £725 in mortgage.