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.

There would be nothing in it for the landlord if it was just mortgage plus tax plus agent fees. They also need to set aside for repairs and then after that they still need to make a profit or what's the point?

Explain yourself more clearly, Op.

If people are misconstuing your question, reframe your question and give examples as to how the opposite is true.

I disagree. Owning property is fine if you plan to stay in one place all your life. I’ve owned several properties, with and without mortgages, over many years, and by far the most stressful bit has been selling and buying every time I needed to move. I wouldn’t dream of buying now - renting gives me the freedom to move that owning never did. I’ve always had decent landlords. “Buying is better” is so ingrained into people’ thinking in this country that they end up with 30 year old helicopter kids who live with parents to save for a deposit rather than pay rent and live independent lives. That’s bonkers!

My DD is renting in a low cost area. Her rent is £800, the mortgage on the equivalent, or slightly better house would be £600. That's only with a £10k deposit. She moves in on Friday. It's cost her as much as solicitor fees, to rent. Her and her fiance want to live together before they buy.

My SIL is paying around £1,000 pcm for a 2 bed flat that if the same flat was on a mortgage it would cost her around £780 pcm (based on its home report value, the Scottish consideration of offers over and a 95% LTV)

2 bed flat in central Scotland currently £160K to buy - 30 year mortgage on £150K would be £800 per month. Same size flat, in same building is currently £995 to rent per month.

It is a true. I pay £1600 for 3 beds in Herts. My friend on the same street, few numbers down, exactly a same house he pays £950 mortgage.

Perhaps.

rent for my house would be around £1500, we pay £725 in mortgage.

For me it was. Before I bought my first flat I was paying £600/month rent, my mortgage repayments were £200 (15 years ago & in the North, hence both figures being low).

When you rent, you pay for the service of someone else managing repairs, redecorating & replacing. Whereas when you own you save the cost of the middle man buy booking your own tradesmen, and even more if you do your own decorating and are OK with patching up a dated kitchen.

@EnglishBreakfastTea1 because the risk if you not paying your monthly rent is born by your landlord not the bank.

My rent was £2,200 a month - nice, but studio flat
My mortgage now is £2,300 a month for 3 bed house.

It's true for me.
£850 mortgage
House opposite was just rented for £1250 pcm

Yes it’s cheaper

Plus with Mortgage you generally are always ahead of the game. And even if it’s the same the day you take out mortgage ie rent in 2020 might have cost £1000 and mortgage £900 so even ish, by 2025 that mortgage is likely £900 still, whilst the rent now £1500.

With mortgage you can over pay, or save deposit to eventually pay off. Rent just goes up and you are still paying as pensioners.

Our house we bought 8 ish year ago ( not uk). The area we bought in was cheap. Rent was still higher than mortgage but not much. Now 8 years on, our mortgage payments remain around the same, yet house prices have trebled. So rental costs are now trebled. We could not afford to still live in area if we rented. Whilst our mortgage remains affordable, and w have a huge asset if we ever choose to sale

Not many landlords would be making a profit if rent was cheaper than a mortgage. Some people will pay a mortgage higher than the local rent price but many pay less on a mortgage.

The only fair way to work it out is at today's prices and rates and exclude a deposit.

Lets say property X is 500k you can't say "oh yeah my mortgage is much cheaper" but fail to include that you put 250k deposit down.

The only fair way to work this out is what would a mortgage be on 500k today and what would the rent be on that 500k property.

Our mortgage is £750 and it would cost between £1000-1300 rent pm for a similar property, according to Rightmove.

Properties in our postcode sell for 180-330k (long street with lots of different types of housing.)

the answer surely is “it depends”? Which area, how much equity, mortgage interest rate

My house would cost many times my mortgage to rent, but that’s because I have lots of equity and a low mortgage on a high priced property in a desirable area.

If I was mortgaging the same property without equity to, say, 95%, then renting it might well be cheaper

My son is paying 1100 for his mortgage 3 bed 2 bath house with double drive

to rent the same house would be around 1800 maybe more

House is worth 320 he put down 100k deposit

you can’t buy a house where we live for 220k

might just get you a two bed flat if your lucky but it would be tiny

rent a two bed flat depending on if your very central or further out can be anything from 1400 - 2500

Why don't you go on Rightmove, see what a 3 bed house rents for, find a house for sale on the same street and put it in a mortgage calculator (assuming 10% deposit, which is pretty standard)? There's no point asking here, people have all got different personal circumstances.

It also depends on decor or state. Most rentals here are magnolia, mouldy and manky kitchens but rent is still high.

Most homes to buy are in a nicer state. Even if on the same road or in the same terrace

(But that's local to me. Specifically)

Not really.

The need to lay your hands on a deposit all at once to buy a house is a barrier to having cheaper housing over your lifetime certainly, but it's not spent money in the same way that rent is.

Unlike rent, the deposit and the capital repayments don't take wealth away (unless the house value falls). Rather, you swap owning cash for owning an asset (housing equity).

With a repayment mortgage, only the mortgage interest is spent money. Whereas with rent, the whole amount is spent. So really the comparison isn't mortgage vs rent, it's mortgage interest versus rent.

Or as someone once neatly put it, "You can rent a house or rent the money to buy a house"

You're failing to account for the increase in property value.

On my street a semi-detached house is for sale for £225k
It'd probably need some modernising but is livable and functional - just not grey.

Monthly repayments
£1,027
Property: £ 225,000
Deposit: £ 22,500
Interest rate: 4.5%
Term: 30 years

To rent:

A room in a shared house is £650 pcm

A 3 bed terrace
£1,150 pcm

A 3 bed semi
£1,200 pcm

Yes a mortgage will work out cheaper but not always immediately. For example… I bought my house 5 years ago. Mortgage is £1900 and the same to rent at that time was around £1600.
Now… my mortgage is still £1900 but rentals of the same size/spec are around £2200. So considerably more expensive.

Apartments are very different though. You could easily be paying less onna mortgage almost immediately. We were looking at a potential buy to let and it’s quite shocking.