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.

Well know you "don't have to" but it's not a fair comparison otherwise is it.

Yes but with rent he paid no insurance or repair bills e.g. last year on our small rental as landlords we had to pay for a new boiler and washing machine. Also various repairs as needed on the shower and bathroom.

If the landlord has a mortgage for their rental, they have to charge a minimum of 120% of their mortgage usual, it's the mortgage companies who usually set that..I could only see rent being cheaper than mortgage if they landlord doesn't have a mortgage

We bought in the boom of 2007, lost 120k in equity overnight in 2008. The property value is not quite back to where it was now but almost. We obviously now have paid off enough of the mortgage that we do have equity in the home.

Our mortgage is £780 p/m, which is more than most of our neighbours.

For quite a shit estate a mile down the road for a smaller house and really not pleasant neighbours its £900 p/m

Not many rentals come up in our area but they are over £1200.

I think it’s down to many variables.

My age and area I live in - if I was to buy my house now even with the deposit I initially put down renting it would be cheaper (just)

But because I have lived in it 16 years and paid a chunk back, my mortgage is cheaper.

It’s why we haven’t moved, as the costs/mortgage etc has meant it just makes sense for us to stay put.

Its always goimg to depend how much equity you have.

If you have 50% equity (or even 25%) then yes your mortgage is going to be less than rent.

If you have 5 or 10%, it may not be.

It also depends when you bought the property. If you bought it 10 years ago for 350k with a 50k deposit, your mortgage is only paying for 300k worth of property value. If a similar property now costs 500k, you are likely to have to pay more in rent to a landlord, who might have a 450k mortgage the rent is covering plus needs to take in enough to cover the tax they pay, costs of repairs/maintenance, letting agents, void periods etc.

Mine is! I pay £400 mortgage, and if I rented my own house it would be £3500

3 bed semi detached in my area (north west) roughly £900 a month. My house 4 bed detached mortgage £567 per month. Also no risk of me being kicked out.

in the majority of places rent is a lot more than a mortgage

My mortgage is £385, rent would be £600-700 ish and that’s being on the low side

Whether it's more expensive or not depends on interest rates, what you buy vs what you used to rent, how big your deposit was and how long your term is. However, for most people when they get a mortgage they are repaying the capital alongside paying the interest so although you don't have that money any more to spend, you do still have some of it, in equity in your home. So to compare like for like, you need to compare the interest portion of your mortgage, with the rent you used to pay.

If you think bout the economics of it - if rents didn't cover at least the interest portion of a the LL's mortgage, then they wouldn't hang on to the property for very long, They'd sell (it's be a bad investment) and there would be fewer flat's to rent. Rents would rise to make rentals a viable options for LLs again.

It’s true for us. Our mortgage is £982 per month. Rental value of our house is £1400 per month.

Our neighbour rents their 3 bed, 1400 a month. Our mortgage is £659.00.

If you are just talking about cost of mortgage compared to cost of rent, the former is usually a smaller figure per month. But if you buy, maintenance costs should also be considered as part of the ongoing cost. If you factor in everything you pay out to maintain a property over time, it may be cheaper to rent. A homeowner has to pay for everything: a plumber to sort out a burst pipe, repairing the roof, replacing a dead washing machine, mending the fence etc. Assuming you have a halfway decent landlord, and these things get dealt with properly, it may be cheaper, and it’s certainly less stressful, to rent. If you put a monetary value on the time you take to sort out maintenance issues as well, renting is definitely cheaper.

And there’s always the risk that if you want to move for a new job, selling a house can be a slow and expensive process - think bridging loan, or renting in a new place while you wait to sell, the basic costs of marketing and selling a house, or perhaps even having to turn down a job because you can’t afford to move. If you rent, you just give notice and go.

True for me, I have owned my house for 7 years, bought with a 15% deposit, and currently my mortgage monthly payments are approximately 40% below what it would rent for.

I just ran the stats through a mortgage repayment calculator to see how it would look if I bought it today and the mortgage payments would be cheaper than renting with 15% deposit, 10% deposit or 5% deposit.

We live in SE London. Rent on our property would be +£300 more per month than our current mortgage on it.

My DS was paying £1900 pcm rent for a two bed flat in SE London. He's just bought a house and is now paying £1750pcm fixed for a few years. So true for him at the mo
But how much does he pays in maintenance, upgrade, repairs etc... I bet much more on average than £150 a month!

Yes my home is worth about £1200pcm on the rental market and we pay £540pcm in mortgage

So many people seem to be comparing a current mortgage on a place bought some time ago (with a deposit) with current rents.

I know, perhaps I should have been clearer!!!

The buying price is fixed in time and property prices tend to go up. So I would expect that someone who bought 20 years ago with a 30 year mortgage would pay less than someone renting now the prices have increased. With renting, the landlord is responsible for the boiler breaking down, or the driveway needing resurfacing, so needs to charge more than the mortgage. Even if you pay less renting, you don't end up with an asset at the end.

It can be true!

You could rent a tiny and very mouldy 3m wide 2 bed house in Cornwall for £1300 PCM.
Or mortgage one on the same street for £220,000. Same size house just further down

Santander say this would cost £1036 pcm with 10% ish deposit

Based on what's available on Rightmove this morning 💐

Albeit 15 years ago but I paid £800 a month repayment mortgage for a 2 bed flat in Oxford. Rent at the time would have been £1200. Lived there 5 years then sold for £5k more than we paid.

Saved £400 x 12 x 5 = £24,000 saved. Then some of that £800 paid off the mortgage so 5 years later we had £5k profit from price increase, a bigger equity as we had paid off 25% of mortgage then less the cost of buying and selling.

The interest part of the mortgage is the same as rent e.g. you are renting from the bank. But yes it is usually cheaper!!

I live in one of those dreadful new builds that MN hates. The mortgage on our 4 bed detached is less than the rent on the very nice 3 bed semis opposite.

To rent our house I think would be c£400 more than our mortgage payment based on the local area.

I’m not sure how you level the playing field as you are trying to do because a lot of homeowners will have put a deposit down which would skew it (25% in our case)

My mortgage is£895 a month zone 6... 3 bed semi and 2 spaces off street parking
Rents are £1600 in my street

South Wales town so majority new developments or old terrace housing.
Average price for 3 bed terrace £210k. 100% mortgage would be £1150. Same size house/layout up for rent at £1200pcm.