First-time buyers who manage to get onto the property ladder could save an average of more than £2,200 a year compared to renting, with buying now cheaper than renting in all areas of the UK.
Monthly mortgage costs are £723 for the typical first-time buyer household, according to research by Santander Mortgages, £189 less than average monthly rental costs of £912 per household. Over a year, savings from owning a property rather than renting amount to £2,268 a year on average.
Biggest savings in London
Those buying in London make the biggest savings by buying, with typical monthly mortgage payments in the capital costing £1,280, compared to average monthly rental costs of £1,569. First-time buyers in the capital are therefore £289 a month or £3,468 better off a year by buying rather than renting. These figures are based on an average first-time buyer property in London costing £420,500 and assume the buyer has put down an average deposit of £134,660.
The smallest difference between rent and mortgage payments is in the East of England, where renting costs an average of £905 a month, compared to average monthly mortgage costs of £862. The average price of a home in the East of England is £252,158, with first-time buyers putting down an average deposit of £59,553.
Raising a deposit
The biggest challenge most first-time buyers face is saving for a deposit. Many prospective homeowners are prepared to make big sacrifices to achieve their aim of buying, with 38% prepared to move back in with their parents to raise funds for a deposit, whilst a fifth said they would give up alcohol to save money.
“Of course, buying a property is a major financial investment with upfront costs to consider, but long-term the financial benefits can be significant,” said Miguel Sard, managing director of mortgages at Santander UK. “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.”
Buying cheaper than renting in all parts of the UK