Mortgage cheaper than rent?

Landlord or first time buyer

@limeandwater can you please answer this question, if you want people to actually answer what you say is a genuine question, can you actually clarify what you are comparing

Our mortgage is more, it is £1500 per month for a 3 bed semi in the West Midlands. 3 beds almost never come up for rent though but are around £1,400.

We were first time buyers two years ago when the rates had shot up. We put down a 25% deposit. I imagine if we are able to remortgage onto a lower rate it will become cheaper but with repair liabilities it is definitely long term more expensive than renting.

Landlords typically own outright or just have interest only mortgages so it isn’t really a good comparison.

Area dependent I would imagine, but even so, a mortgage will be cheaper than rent in many areas. DD just bought a house with her partner in a very sought after and popular area (not London.) Their rent was nearly £1500 a month (private let, 1 bed flat,) and the mortgage is £1100 a month for a bigger property. (2 bed house with garden front and back, and a garage.) Same area.

At least the repairs and maintenance are done with renting, but private let is precarious. Social housing is much better, but there is a serious lack of that unfortunately. DD and her DP are on good salaries, so they could afford the £1500 rent, but it was ludicrous for them to keep paying that in rent. The house they have bought not only has a mortgage payment of £400 a month less than the rent on the flat - but also, it's double the value of the flat.

The posters talking about £450 and £500 a month mortgage payments, compared to the rent being £1200 or so, (for the same property,) must have bought their property YEARS ago. You can't really compare rent now vs your mortgage repayments - when you bought your house in 2009! (Or before.)

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You can rent a £220k house here for the same cost monthly as you would be paying in mortgage per month using today's interest rates over 25 year term, mortgage would be lower if you extended mortgage to 35 year term
You also take into account future rent increases which are almost guaranteed vs only dealing with varying mortgage rates as an owner and paying it off and paying £0 mortgage eventually although obviously you also have to pay for maintenance

But over time the rental costs will increase by far more than the mortgage will, and, as I said above, the mortgage will end resulting in 0 payments (not including upkeep costs) and an asset, whereas rental payments don't end.

This.
It's possible that short term mortgage + upkeep costs/insurance might cost more than rent, but if you actually want to compare the 2 you need to look at lifetime costs, and take into account that not only does the mortgage end at some point, but you then own an asset. The person renting has to continue to pay rent and doesn't have anything at the end of it.

Before im retired my mortgage will be long paid off, so when I am retired my mortgage will be £0. How much will your rent be when retired?

You are right OP.

I am in a 300k house. The rental cost of houses on the street is about 1.2k a month.

The current Lloyds calculator says that, assuming I had a 10% deposit, my mortgage would cost me £1,504 a month.

The sums don't stack up any more. As you say, people are quoting house prices and interest rates from 20 years ago...

You can’t stop comparing rent now to mortgages 20 yrs ago because home ownership is a long game.
Some risk on profit based on area but even then it provides long term secure living accommodations.

Yes, and forgetting that landlords need to pay tax on the whole amount of the rent before taking the mortgage payment into account.
This, imo, is probably the biggest change (that occurred over a few years, a few years ago) that has pushed rents up so high.
Also, landlords have mostly reached the end of their lower fixed rate interest rates fixed 5 years ago or so when rates were much lower, and are now paying much higher rates.
The figures just don't stack up any longer for landlords, and together with new legislation and increased risks, they are selling up in droves.

I’ve just looked on rightmove at houses to rent around my post code. Our mortgage for our 4 bed detached house is about £1k (can’t remember exactly). The only things cheaper than that in terms of monthly rent are a 2 bed flat above a shop and a 2 bed flat in a semi that appears to have converted into 2 flats.

So not only is mortgage hugely cheaper but you also get at least 3 times the space.

It's hard to compare, often people buy a different type of property to that which they would rent, e.g. a starter or a small terraced family home rather than a flat or flatshare, and sometimes in a different area as they've reached a milestone such as marriage or having children and leaving a city centre for the suburbs.

They may not be able to afford to buy a property as nice as the one they are currently renting, but it does enable them to get on the property ladder.

I pay £1100 per month on mortgage

if I rented my house out It would be for roughly £1750 pcm

If you were to take a mortgage on your house now though? With say 10% deposit.

its true for us since we bought a cheap flat that is a doer upper lol not sure if we had bought a new or large house maybe wouldn't be the case.

"Bias way".

Yes, that £100 < £200, that kind of bias.

😂

are you trying to only compare immediatel monthly cost and ignore future changes?
Also are you trying to compare first time buyer with a small deposit vs rent or are you trying to compare landlords cost vs rental income if they bought today?
It's very unclear

It is here. This is why there are next to no rental properties available. Its a nice area with a very high ownership level.

Landlords jack up the rent each year because they can. They say their expenses like agents fees, insurance, maintenance etc have increased. Yet most of these are tax deductable business expenses and can be passed back to the tax man. At the same time these landlords are offering nothing extra for the extra rent. I suspect that there are some dishonest landlords who pass these expenses onto tenants and ALSO claim for them as tax deductables. Effectively double dipping.

The landscape will change after May 1st. Tenants will be free to challenge rent increases and appeal to the 1st tier tribunal. This will particularly benefit long stay tenants who have seen no improvements to the property during their tenure. Many such dwellings may be below accepted market standard with outdated kitchens, bathrooms and heating. Landlords wont like that, so they will be more inclined to negotiate and accept a lower rise than having to wait 12 months or more for a tribunal decision.