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.

Same for any business - you don't just look at the income - you need to look at short term and long term, fixed and variable costs. To be fair we do the same with our household income - we have a maintenance budget - always have - any landlord who doesn't budget for annual maintenance when they invest and decide on rental income is not running a business in the conventional sense - I'm sure there are plenty who do it this way though.

Our mortgage is about £400 cheaper than rent for the same property in the same area. I’ve literally never come across anyone who pays more for a mortgage than they would for rent in the same property. Apart from social housing but that isn’t really ever like for like.

Rent would be about 3 times my mortgage where I live

when comparing the two, you really do need to factor in the cost of maintaining a home. For example? My house desperately needs new windows. I’ve looked into the cost and I’m looking at £6k if I’m lucky. There are a bunch of other things that need doing that I simply don’t have the money to pay for at the moment. If I was a tenant, I wouldn’t have to pay for these costs. The landlord would.

OP do you understand what a market is?
The market value directly relates to landlords and their underlying costs. It's not a number plucked out of the air by the market gods.

Isn't it recommended that you save 1% of a property's value each year for maintenance? You might no spend it all in one year but on average you would. Which would be factored into rent, not mortgage.

Yes that’s true. And if you factor that in you also need to factor in that you need a substantial deposit when purchasing a house, far greater than a rental deposit. And then on the other side you need to factor in that a portion of your mortgage payments is basically paying yourself in the form of equity. And that your mortgage is likely to go down over the term of it, whereas rent will always go up. And also that you will only pay your mortgage until you own the house (and you have an asset at the end of it), whereas if you rent you will be paying forever (and no asset). And that houses tend to increase in value.
Which is why it’s an entirely pointless comparison to make, as you are not comparing like for like and there are too many considerations to make it meaningful.

It's comparing apples with orange trees, absolute nonsense comparison. A mortgage can be split over 5 years or 40, can be IO or capital&interest, might be fixed or variable in interest rate and therefore repayments. The reality is people decide what they can afford per month and define their mortgage from there; given house ownership means more costs, it's sensible to pay a little less for mortgage than you could for rent. And that is how mortgages end up cheaper than rent.

If you consider renting forever takes you to the end of your life, renting will generally cost more than buying will over a lifetime wherever you live. Thats the only comparison which really makes any sense.

Exactly this. If I’d have taken my mortgage out over 10 years it would have been more expensive monthly than if I’d have rented the same house. But at the end of that 10 years I’d have owned an asset, whereas if I’d have rented for 10 years I wouldn’t.
The OP has taken some memes on social media about the perceived ridiculousness of being refused a mortgage based on affordability when they’ve proven they can afford a similar amount in rent each month, and turned it to a thread comparing 2 things that cannot realistically be compared.

No but the monthly rent you are charging should be enough to cover things like boilers and cookers (over the life of these items not necessarily in the first year - both should last way longer than one year).

Person Y puts the rent up, because her mortgage rate went up 2 years ago and they can't carry that increase any longer without putting the rent up. A few other local landlords have had to put their rent up too, for the same reason. Person X then puts THEIR rent up. Not because they need to, but because local conditions dictate rent (as you said yourself) and why should they be the one to be renting their house out for below market value.

And before you use your phrase "that's not how it works" or "not in my experience".....are you disagreeing with the great swathes of us who are saying it IS in our experience?

The most ridiculous thread I've ever participated in.

Yes mortgages are cheaper than rent in most cases.

But the op doesn't care about that, she's actually annoyed BTL isn't more profitable for her.

🙄

I think the OP is put out because she believes she’s providing some sort of benevolent and charitable service to her tenants and is annoyed that people may think she’s financially benefitting from them.
Let’s face it, most people don’t choose to rent over purchasing by choice (yes I know there are exceptions, I personally rented for 3 years by choice because we moved around a lot), they rent because they either can’t save up a deposit (usually due to paying high rents!), or because they can’t get a mortgage for whatever reason. Most people rent because they don’t have the choice to buy.

I agree. She has another thread about giving a relative a freebie house so I think we're supposed to say what a lovely landlord she is not passing on costs to her tenant. The opening post was just very very odd way of getting there.

OP can't keep bleating on that you can't pass on costs because of "the market". Does one not think "the market" rate is dictated by rental increases due to BTL mortgage rates, local estate agents putting up management charges and increases in buildings insurance?

My share of the last place we rented was £865. It was two bedrooms with built in wardrobes. A double bed would fit in each room with space to walk round it on three sides. No space for any other furniture. The bathroom and kitchen were cheap and cheerful landlord installations. Very pokey but functional. The living room had space for two Billy bookcases and a two seater sofa and a small dining table with two chairs.

My share of our mortgage is £560. Two massive bedrooms, one smaller. Spacious kitchen with a really nice fitted kitchen, 2 small but modern high spec bathrooms, utility room, pokey office. Lovely large living room that sits two sofas, two bookcases, full dining table and chair set with space leftover. On the first night sleeping there I woke up to use the loo and was a bit uneasy as I had to walk so far! Compared to the three steps it would take to transverse our rented hallway.

I mean the most obvious thing, is that if it was cheaper to rent then to buy, buy to let landlords wouldn't exist because there would be zero profit.

Given this fact there is 2 main reasons why people rent over buying, they don't have a lump sum deposit since 100% mortgages no longer exist or they believe their tenancy will or could be short term (due to job instability, new relationship, or trying an area before they commit)

Or they have a deposit, but are low earning, so the banks won't lend them anything close to enough to buy with, despite the fact that a mortgage would be cheaper than the rent they are currently paying. I suppose you could say they don't have a deposit, but you can have 100k saved, but still not be able to borrow enough to buy..

Several people have made this (completely correct) point but OP is continuing to ignore logic, basic common sense and numerous people's own lived examples vs her "evidence" of " It isn't my experience".

At this point I think she's just trolling. Tbf if she wants to insist everyone would be better off renting, she can go for it, the £600 I save every month vs the cost of renting the identical house next door makes it quite easy to ignore her nonsensical ramblings tbh 😃

OP, many people have given you their unbiased answers as to their personal costs of renting v a mortgage, yet you seem so entrenched in your view that renting is cheaper than buying and are brushing off these posters. Why did you bother asking the question if you only wanted an echo chamber to tell you that a mortgage is more expensive than renting?

I've been wrong about many things before, we all have. We live, we learn. You don't seem to be willing to take on any alternative views though. I'm not sure why not...? If you really want an unbiased answer, why not put a few figures through a mortgage calculator?

Exactly. I’m saving £2k each month paying a mortgage on this house vs the cost of renting it. I don’t care whether op doesn’t believe me because I KNOW I’m right!

We're currently buying a 3 bed semi. The mortgsge will be 650 with a 10% deposit. To rent a terraced 3 bed on the same street is 750. Which doesn't have off road parking or our ginormous garden.

Mortgage is cheaper than rent but the repairs you have to pay for make up for it. Just had the ceiling near our bay window come down. Going to cost a bit!

Absolutely. The house next door to us is up for rent, exactly the same as ours but less of a garden and smaller driveway. It’s £1700pcm! We pay £800 a month for our mortgage….granted we were lucky with our first house, and have owned this for 5 years but still. Can’t imagine having to spend £1700 a month to rent. It’s ridiculously high now.

It becomes more-true if you stay put for a few years. I bought in 2013, the repayment mortgage was 1.2k a month, and was set to stay around that mark for the 25 year life of the loan (we've moved). Rent for a similar property in that area is now more than 2k a month.

I bought my home from my landlord around 6 months ago. My mortgage is cheaper than my rent was.