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.

Exactly.

£0, because I don't rent.

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

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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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.

@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

Yes initial monthly costs.

Landlord or first time buyer

I suspect there is VERY little in it. I pay around £5-10k a year for upkeep of a 1960s house, which is endlessly falling apart in terms of damp proofing, roofing, pipes, etc.

The other issue is that my DC are renting flats in London that have a market value of several million - house shares, admittedly, but if they didn't rent they would never be able to enjoy living where they do!

either/or

Why does any of this matter to you OP? People are telling you over and over that their mortgage is lower than their rent previously was and you don’t want to believe it. Maybe you should just scuttle off now and be offended somewhere else 🤷‍♀️

To be fair on @limeandwater there was a time about 20 years ago where it was cheaper renting where I lived rather buying - maybe something to do with the housing crash - as we were thinking of buying but decided not to. We bought our first house in 2013 when it had definitely flipped back to a mortgage being cheaper than renting.

I am not offended. Not at all.

I think this really depends where you are. My sister recently managed to get a first mortgage with a 10% deposit. Her mortgage is £700 per month for a small terraced house. She was paying over £1000 a month in rent for a 2 bed flat in the same area so yes it was cheaper to buy and have a mortgage. I've always been of the belief that renting is more expensive. But perhaps not always.

OK, but you keep posting things which don't also add up in the real world?

You can't deny people's lived experiences @limeandwater , or the sums which show that their mortgage is cheaper than rent.

Seems a strange hill to want to die on conversationally.

I am not denying, of course if somebody put down 30% deposit their mortgage is going to be less than their rent.

Average upkeep costs are around 1-3% of the house value.
How much is your property worth?

I'm currently living next door to my house whilst work is being done. The house is exactly the same as mine. The rent is well over double my mortgage.

Landlord would probably lose money initially per month if on repayment mortgage rather than interest only around here, once taxes etc taken into account but would eventually profit further down the line or make money once house prices and rent value rise, if interest only would break even or make a small profit initially. But like any business you have to be in it for the long haul, it's a long term investment, like buying stocks and shares, you may make an initial loss but if you invest for the next 20 years you'll make a profit
First time buyer in my area with 10% deposit and 25 year term monthly payments on repayment mortgage is basically the same only 35 year term it would be cheaper per month from the get go

2 questions.

1. How much of your house do you own?
2. When did you buy it?

It’s area dependent isn’t it? We live in a fairly expensive bit of south east. Rent is far more expensive than mortgage here. We rented for years (couldn’t get a mortgage) when we were finally able to buy mortgage was much cheaper (even taking deposit into account.). My brother lives in north east, renting is cheaper where he is.

Well I'm glad you're not denying the reality of house buying in the UK.

The average buyer puts down 15 to 20% deposit when they purchase.

That mean most mortgages will be influenced by the deposit - that's reality.

Hence mortgages are cheaper than rent for many.

A landlord might "lose" money month by month but retains a capital asset which may be appreciating.
So it is not as simple as mortgage 500, rent 500 plus maintenance 100 = a "loss".
Since capital equity likely to be there so landlord may sell up and make 250k or whatever.

Yes, I think that may make a difference; I bought my house in 2008 and it's nearly paid off.

So in no way a fair comparison.