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.

It exactly works like that

What are the average value of the properties?

It really doesn't.

This has been my business for 21 years.

I'm sure it depends on area and size of deposit.
DS has just bought in Leeds. His rent was £1350 a month. Mortgage is around £1250. Similar sized house and location.
Bought for £285k with £185k mortgage

What is the value of the property?

Well if you're renting out property for less than your mortgage plus tax and agents fees then you're a fool

You haven't given me anything to compare it to! You said you'd love to know the figures, I gave you context. All you've done is vaguely reference your "experience".

An identical version of my house in my estate is rented around £1700 a month, my mortgage is £950 a month.

Again not a fair comparison.

He has purchased 30% of the property upfront.

You have to take deposit out of the equation.

Ours is the same, but for a much nicer property.

Our mortgage is £1600 pcm for a 5 bedroom house with smallholding, 5 acres, 4 barns, huge mature garden. We paid £850k.

The house we rented 4 years ago before we bought was 3/4 bedrooms with no garden and no outbuildings or land. We paid £1200 a month, but it went up to £1600 for the next tenants when we moved out. I don’t know what a property like that would sell for as was a cottage on the grounds of a larger property, but probably £400-500k. I see loads of properties for rent around here for £1500-2500 that are not as nice as ours.

That said, we rented and saved for a long time, which is why we were able to buy such a nice house with a big deposit.

200k, bought for 103k 11 years ago

I own a 2 bed house with a garden and my mortgage is less than the rent on the flat attached next door to my house.

Obviously it all depends on how expensive the house was to buy, how much deposit was put down, how many years the mortgage is spread over, what the interest rate is and so on.

So the only fair way to work it out, is working out what the mortgage would be at today's value.

We rent our London flat out for £2,200 p/m (1.5 beds, zone 2, SW London).

Our mortgage is £3,400 p/m (4 bed, Surrey).

And sure you'd be thinking "yes but one of those properties is twice the size" but they are the exact same market value (£800,000). We bought in 2022, with a deposit of £160k.

It was in my case, not sure how common this is! Our rent was £1000 per month, our mortgage is currently £850pm. This was with a 10% deposit we managed to save whilst renting. Rented property was a two bed maisonette, current house is a 3 bed semi.

Mortgages are definitly cheaper than rent where I am (Greater London) - maybe not of you have a 100% mortgage but not sure if you can still get those.

It is substantially more to rent here - I mean eye wateringly different. A 4 bed house to rent here is £3000+ pcm. My mortgage is £1500 pcm. If I was buying the house now it might be comparable I guess but Im not sure I know many people paying 3K a month mortgage.

Yes it can be! Mine was when I first bought. Though you may not get the same quality or area for the same/less amount.

Mortgage on my 3 bed house is £690 pm. My exH pays £950 for a 2 bed flat in the same area. So YABU.

My mortgage is considerably cheaper than it would cost to rent my property. Interest rates would need to hit about 15% (and rents remain exactly as they are now) before that changed.

Landlords would all go bust if rents were lower than their mortgage payments.

I suppose if you're a first time buyer with a small deposit, and live in a reasonably low rent area then the opposite night be true. But after a few years, if you fix, you'd still probably find rents begining to outpace your mortgage costs.

Fairly obviously, if it wasn't the case that mortgages are cheaper than renting for an equivalent property, the entire concept of landlords would not be viable.

only if you don't calculate upkeep/repairs/mortgage fees/insurance

My brother is a landlord of a rental property in London. He has an interest only mortgage. The rent is higher than the mortgage but after fees and all the other costs he just about breaks even.

My house would cost about £3.5-4k to rent. We pay £1k mortgage but had a good deposit. If we were to have taken out a 90% mortgage the repayments would be £3k so still cheaper for mortgage than rent.

I don't "have to" do anything. Surely you realise that everyone's circumstances will be different?

Which means his £100K deposit is now tied up in property. If he was renting it could be in a high interest ISA getting around 4% interest a year (£4K), plus he now has to pay all maintenance costs on the bought property. Good for him in the long run, but in the short term owning will cost him more than renting.