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 really depends, with mortgaged properties there are so many factors to consider such as:
what is the Interest rate of the loan?
Is it a Repayment or Interest only?
Term remaining
All of the above can decide how much you pay a month. A friend of mine pays £2700 pcm (25 years left) we pay £980 and have got 10 years left, there are so many variables..

Glad your complete ignorance on the subject is amusing us both. I'm certainly finding it entertaining.

Tell me what other costs you cannot pass on?
If your costs are increasing you increase the rent. It's basic business.
What costs are you talking about? Not repairs that are out of your control. Your words were general costs

I think you may have just started this thread in the hopes people would say that rent is a bargain in comparison to a mortgage they'd be paying £1000 in rent vs £2000 pm mortgage but in many cases it isn't the case and you can pay around the same for a mortgage as rent but you seem to be very dismissive of those who have said so. You also seem to ignore the fact property buying whether as a landlord or owner occupier is a long term investment and the benefits usually come a few years down the line.

I honestly don't want to argue.

You think I am wrong and that's ok.

Perhaps I wasn't clear in the op, but what's done is done.

We're buying after renting with a modest 15% deposit in the SE. Our mortgage will be similar to our rent, more after insurance.

I don't understand what you mean by pass costs on? What you mean is increase the rent isn't it? It doesn't work like with ressie.

Sure on our commercial properties they will 90% of the time be a full repair and insuring lease.

I agree with most of what you said.

Was renting a 2 bedroom house in my area for £950 per month. I now pay £550 a month on a mortgage for a 3 bedroom house that has a much bigger garden and driveway. That is with 90% mortgage. And we only bought last year so this is with current rates. All the properties in my area that are to rent are a lot more than my mortgage. Maybe Scotland is different but it is the norm here for renting to be more expensive than a mortgage, making it harder to save for a deposit.

Our mortgage is much cheaper than average rents in our area.

My mortgage is 900.
To rent this would be £1350 a
month . We live in south east .

Ok, for fun; I have run the numbers and if I was to buy a £800k propert,y like the one near me that is rented out for £3,750 pcm, on 100% mortgage it would cost me £4,300 per month, plus stamp duty of £63k.
So yes, it would be cheaper to rent in year 1 and mabe in year 5, but what about year 15 when the rent is £9,000 and the mortgage is £4,300? That of course assumes that interest rates are constant and rent rises with inflation and inflation is steady. There are too many variables and you need to look at the total costs over 25 years for a true comparison and then also take into consideration the value of the property in year 25, at which point you can downsize and have some (tax free) cash in the bank. I think the answer is, it is cheaper to buy than rent over a lifetime.

So why laugh at the person saying they can get a cheaper mortgage in 2026. It is literally quite possible in many areas even with 5-10% deposit

I’ve done the sums on the below properties as if we were a FTB. The house for sale is actually down the road from one we looked at as FTB. I’ve used figures from today and both houses are in the same area.

House for sale; 3 bed terraced about 30 years old. 1 parking space and smallish garden with a small conservatory. Kitchen and bathroom recently renovated, flooring is recent and neutral. Decor is neutral and easy to paint over. On the market for £200,000. I have assumed a 5% deposit and 30 year mortgage, which is what we took out as FTB. Deposit is £10,000 and mortgage amount is £963 per month with a 4.5% interest rate.

To rent: 3 bed semi detached, similar sized rooms, about 5-10 years old. 1 allocated parking space. Bathroom and kitchen still fine and flooring and decor also neutral. Smallish garden. Monthly rent is £1,300 per month and deposit is £1,673.

I have had to go for a 3 bed house on the rental as there are no 2 bed properties available to rent and so I have looked at properties to buy to match those to be comparable. There are cheaper 2 bed properties available, although admittedly they need more work. The expensive part is getting the deposit for the house to buy but the renters need over 15% of the deposit for the rental that they need to buy.

We were FTB 8 years ago. Once we’d got that deposit together, our mortgage was cheaper. We took some money out of the house to do it up but the mortgage was still cheaper than rent. The property increased in price and we sold that house and bought our current house. Our current mortgage is £1280 a month for a £300,000 mortgage. That is for a 5 bed detached. For £1,250 in rent we can rent a 3 bed semi-detached house, which is about the average for a 3 bed rental here. To get a 4 bed detached as a rental would be £1,625 per month.

Once you can get that initial deposit, it is cheaper. It then continues to get cheaper. People struggle to get the deposit together for a house because of high rents and high deposits for rent.

Never paid more than 500 a month mortgage, had two houses now mortgage free. 3 bedroom owned outright. Rent for similar style house is 850 - 1150 a month. Know most people are in the rent trap because can’t raise a deposit. In my experience everyone with kids own not rent. I only know someone who rents due to living in London.

You haven't been clear in any of your posts, let alone your OP.

OP - rent has risen by just over 39% in ten years. So yes a mortgage is cheaper in the end, plus you have rent control (or mortgage control rather) because you can adjust the terms of the loan each time you come up for renewal you can add years to keep the cost consistent. Eventually (took us only 5 years of owning) you have 60/40 with the bank and the rates fall sharply. Rent is generally only adjusted upward, though I don’t know where you are based. This is particularly true of London, we couldn’t afford to rent the house we live in, currently it would rent for £3,500 per month, but is only £1,900 to mortgage.

I've just done a quick calculation based on our rental property, worth about 400k. It's rented at 18k per year and a 90% mortgage at 4.2% is less then 16k per year. Obviously you would need to find the 40% deposit but that amount would potentially drop every year and even more with overpayment.

Many have understood my point, but accepted could have been clearer in OP.

I’ve been a landlord for 29 years. Rents have not gone up four fold in that time. Rent started £550 for a new tenant. Now around £1250 for a new tenant so little more than double.

I think it probably true in many areas. however when you factor in the maintenance and upkeep of a mortgaged house with the option of passing on maintenance and upkeep issues of a rented house to a landlord the difference decreases.

And then there is the sunk cost argument about rent versus the increased value of an owned property over time. It’s not a simple yes or no.

Presumably it depends on the size of your mortgage and amount of deposit. Our rent is £1295, it's a 3 to 4 bedrooms property with floor space of approx 110 square metres. They sell for around £380,000. If I borrowed £240,000 the repayments would be about the same as the rent. Small flats excluded, since we are a family with kids, we couldn't get on the property ladder here without paying more than our rent. That obviously doesn't consider that rent is dead money and over the time mortgage payments drop and you gain equity.

I agree with what you're saying. We are currently renting privately and if we were to get a mortgage for a house in the same area and same size, we would be paying roughly the same or higher in many cases each month (based on a 10% deposit). Obviously it will be worthwhile in the long run, but it's hard to see the benefits short-term.

To rent a similar house to ours in the same area would cost about £3000pm, our mortage is £1000, in the house about 10 years.

You're hilarious & U turn more than Starmer.

Your question/statement keeps changing.

very few people are agreeing with you & even those that are, aren't actually agreeing with your initial post.

its all a bit mad tbh.