Owning a home is cheaper than renting in all areas of the UK
Potential first-time buyers would have lower monthly outgoings if they bought a property rather than renting one, with rental prices surpassing average mortgage repayments in every region of the UK, Santander Mortgages has found.
Homeowners could save £2,268 a year if they were able to purchase a property rather than rent.
The HomeLet Rental Index found average monthly rent in the UK is currently £912 per household, compared to monthly repayments of £723 for the average first-time buyer household. Therefore homeowners could save an average of £189 a month or £2,268 a year compared to renters.
Miguel Sard, managing director of mortgages at Santander UK, said: “Many first-time buyers understandably focus on the challenge of saving for a deposit and wonder how they will afford a property.
“However, it is often assumed that when you purchase a property you will be under greater financial pressure and our research shows the reverse is true.
“Of course, buying a property is a major financial investment with upfront costs to consider, but long-term the financial benefits can be significant.
“With annual savings averaging well over £2,000, this can really mount up over time and of course once the mortgage is paid off you have a valuable asset to show for it.
“Getting independent advice and looking for competitive rates, is crucial to get the right mortgage to meet potential homeowners individual needs.”
With the average first-time buyer deposit being £51,9052, hopeful buyers are opting for alternative methods of saving.
One in five (22%) of those wanting to buy would consider selling shares in the property, offering a potential capital return when the property is sold.
Some 38% would consider moving back in with their parents while saving for a deposit and 21% said they would give up alcohol to raise the funds.
Historically, renting has appeared cheaper, especially in areas like London and the South East, where property prices have consistently been high.
But since 2010, where the economy saw a reset, the UK has seen inflation fall and with it mortgage rates have come down significantly, meanwhile rents have steadily crept up.
Prospective first-time buyers in London are set to make the biggest monthly savings by making the switch from renting to property ownership, as average rents exceed mortgage payments by over £289 a month or £3,468 a year.
First-time buyers in Northern Ireland would see themselves £178 better off per month. At the other end of the scale are those living in the East of England, where typical first-time buyer monthly mortgage payments exceed average rents by only £43.