Mortgage cheaper than rent?

[limeandwater]

On this forum and plenty of other social media sites to be fair - there are a number of people who state that a mortgage is often cheaper than the rent.

It's not true is it? In fact it is quite a long way from being true.

Yes, but why are you saying it? What difference does it make? Whether you think mortgages being cheaper is misinformation or not, you'll always have tenants because so many cannot raise a deposit or don't want to settle in one place.

Definitely cheaper mortgage than rent in our case!

We pay £500 a month mortgage. The house next to us rents for £1300. Absolutely no difference, both modernised to a similar standard. Same garden space. Same parking.

So they effectively pay three times what we pay to live in exactly the same space.

I could not buy the house I rent for less than what I pay in rent, even with a 10% deposit. Mortgage payments would be about £350 per month more. It depends very much on what you have to put in and where you live.

People who have mortgages of £500 per month did not buy at today’s prices so not a fair comparison.

It depends. How are you factoring the deposit? Which region?
You can generally rent a £1.3 million london property for less that a 95% mortgage on that property .
Ie mortgage at 5% interest 7,000
Rent probably 3500 / 4000

It was certainly true when we first bought, the mortgage company wouldn't give us a mortgage that cost less per month than we were paying in rent! So infuriating. You do have maintenance on your own house as well but just mortgage versus rent mortgage could well be cheaper.

Massively depends on area and when you bought/how long you have left to pay it off. We own our house and pay £450 a month for our mortgage. All the houses on our row are absolutely identical, and the one a few doors down went up for rent 6 months ago at £1600 pm. But our neighbours who've recently moved in as first time buyers pay £1000 a month. We were lucky we bought our first hose when house prices were low, made a good profit and got a great rate when we moved again. I definitely think it's cheaperthe majority of the time, but there are a lot of factors at play, and I'm sure location plays a huge part. We're on the edge of the Cotswolds.

But how much was your deposit?
What is your ltv?

When did you buy it?

A 3 bed semi in my area is around £1000 per month. My mortgage for a very similar house in same area is £700.

I'd say there's a £50 difference between my mortgage and what I'd get in rent for my house.
That £50 doesn't mean much when I'm also responsible for all upkeep and repairs and had to put a deposit down first.

A £260000 flat costs £1450 a month to rent in my area.

If I bought it the mortgage would be around £1250 with a 25k deposit. It is more expensive to buy undoubtedly.

The service charges and ground rent cost a further £275 a month then you need to factor in maintenance.

However after five years or so it becomes cheaper to buy as inflation increases the rents and the value of your money depletes, and salaries increase.

If a landlord factors in a full refurbishment every 15 to 20 years there is very little profit depending upon increases of property prices and yields etc.

Our deposit was £9000 our house was £180,000. We did a 5% deposit. Yes it’s more affordable than some areas but the house prices where I live haven’t gone up massively.

We have lived there for 8 years now.

Absolutely for me.
The house next door is being rented out for more than double my mortgage.

My DS was paying £1600 a month rent for 1 bedroomed flat .
Hes recently bought a two bedroomed flat and mortgage is around £950 . Small deposit .

When did you buy though, because eventually your mortgage payment and general maintenance will work out cheaper than renting the same house
12/13 years ago I would have been paying about the same in mortgage repayments as renting similar house, now rent for a similar house would be 2.5x what I pay in mortgage repayments which means even with additional maintenance still works out cheaper for me to have bought rather than rent

I agree with you about the balance of individual v multiple property owning landlords.

But I was responding to your generalisation to the OP (who I suspect rents out a number of properties):

NemesisInferior · Today 11:14
I'm sorry, what?
What landlords in any sort of sane mind are there that are happy to make a loss on renting out property?

There are plenty of circumstances where a short term loss is a sane decision. Nowhere has the OP argued that a long term overall loss is a sound business plan.

Are you looking at costs of an interest only mortgage though, where you would walk away with no house at the end, same situation as renting

Or are you looking at costs of repayment mortgages where you would actually own a house at the end?

Who did the ones who sold sell to?

There's an assumption that LL selling up reduces available housing but I'm not sure that holds.

A LL pulling out either sells to an owner occupier, so one fewer rental property available but also one fewer rental property needed, or they sell to another LL so the property is still available to rent.

The only way the new rules actually reduce property available is if LLs keep hold of properies but leave them vacant, which seems not likely in the long term (but may happen in the short term eg if they want to sell but are holding out for a higher price than they can get, or are working out how/if they can meet the regs before reletting).

not only can it be cheaper, but you eventurally pay it off and dont have to pay anymore

Surely if you're making this about fair comparisons and want to include deposit then you need to factor in the years and years of rent that tenants will continue to pay after their owner pays off their mortgage and fully owns their home?

Surely that would depend on the area and the property. I know people who rent and I've never paid that much for a mortgage

It depends on your mortgage rates, deposit size and the property prices in the area, demand for rental properties in the area, loads of factors.

I gave my daughter money for the deposit. She’s now saving £400 a month paying mortgage rather than rent!

In Scotland it absolutely is.

atleast half of what I would pay for renting