Buying is cheaper than renting for first-time buyers in every part of the UK, according to new research. Banking giant Santander say average monthly rental payments across the UK are now higher than mortgage repayments. Its analysis has revealed that first-time buyers could save more than £2,250 a year if they were paying a mortgage and not rent.
The UK’s average monthly rent is currently £912 per household, compared to average first-time buyer mortgage repayments of £723.
Renting in the UK has always been seen as cheaper than buying, particularly in cities such as London. However, with interest rates at historic lows and mortgage rates correspondingly low, mortgage repayments have stayed put while rents have risen every year.
While mortgage repayments are becoming more affordable than paying rent with the longer-term benefits of home ownership also evident, the biggest barrier for those seeking to purchase for the first time is saving enough for the deposit. Santander says the average first-time buyer deposit is £51,095.
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.”