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.

Have you bought before? It entirely depends on the size of your deposit, and the mortgage rate and terms. If you have a decent deposit it's not unusual for a mortgage to be cheaper than rent

Actually that's exactly how it works. You're venturing a lot of firm opinions without disclosing your situation. I have had several buy to let properties over the years so don't speak from theory

Editing to say. this is a pointless thread if you're basing it on a 100% mortgage which it seems you are. What are you actually seeking to prove?

Why is a pointless thread? The only way to compare like for like is to only compare rent to 100% mortgage. And the comparison should be the interest only element of that mortgage because that’s renting money rather than the property. It should also include on costs. Stamp duty, solicitors fees, selling fees. And account for any profit, which at the moment isn’t much and in some parts of the country equate to a loss.

Ok so based on all of those things, can you give us an answer on whether it is cheaper to rent or buy a £300k house in your area at the moment, just as an illustrative example? Let us know what interest rate you’re using, what period of time you’re calculating profit over etc.

I did a rough calculation upthread based on a rental property. I forgot stamp duty. Figures were similar. But I didn’t include any of the obligations a landlord has. I used 5% as an interest rate just as a rough guide. A home owner is not getting a cheap deal for 100% and landlords generally need to stump up 30%. The length of the mortgage is irrelevant as I used interest only as this is the correct comparative.

For the short term at least, it was about even. However, if considering landlord on costs and tax as tax relief has been massively slashed, it would be far cheaper to be an owner occupier. So many landlords have exited the market because they don’t have enough equity in the property even at 30% and were making losses. That in itself is telling. And I really don’t see how there is an argument against what is actually happening in the market place.

I also think rental values have topped out for a few years to come where my properties are based at least. I don’t raise prices every year. I don’t think that’s fair, especially as sometimes rentals go down as well as up as they did last year and by the end of the year had gone back down. I also have long term tenants on reduced rates. However, sadly due to the stupidity of government policies, which have massively increased my costs, and as a result increased rental values throughout the country, I had to increase rents to those people substantially in order to make a profit. And this is bearing in mind my profit is my income as I’m not well enough to work.

Oops accidentally quoted my own post. Migraine city here… 😬

My flat would cost me more every month on rent that on mortgage repayment (and I have a high LTV / short duration mortgage).
It hasn't always been the case though, when I moved here 5 years ago, renting would have been marginally cheaper, but it has shifted now, despite a higher interest rate.