by Mark Johnston
Many recent reports have shown that despite differences in rents and house prices across the country, buying a home anywhere will save money in the long run.
It appears that rents are now so out of touch with wages that some families are spending over half of their income just to keep a roof over their head. Rents now make up a third of people’s earnings across England leaving even less for other essentials such as food and fuel.
According to the Halifax buying a house is over £100 a month cheaper than renting. By contrast, in 2008, buying was 29% more expensive than renting.
The average mortgage rate has fallen from 5.75 per cent in 2008 to 3.63 per cent in 2011, while the average house price has dropped 11 per cent over the same period, according to Halifax. Average monthly mortgage payments are down by nearly a third
Rents on the other hand have increased around 9 per cent since 2009. This is largely a result of increased demand from first time buyers struggling to get a foot on the housing ladder , due to deposit requirement that have more than double in size compared to a decade ago.
Therefore if you rent your home instead of buying it, you could be £194,000 worse off over your lifetime, according to research by Barclays.
Getting the keys to your own home rather than forking out on rent will save you nearly £200,000, it is claimed.
The bank obviously has a vested interested interest in tell potential buyers this as they are the ones who provide them with the mortgage. But buying a property, paying a mortgage and maintaining a home costs an average of £429,000 over 50 years, not including its final value, this compared with £623,000 in rent, and these figures therefore speak for themselves.
The initial cost of stepping on or moving up the housing ladder can be a big barrier for many but the long-term benefits hugely exceed the initial expense.
Monthly mortgage payments are usually more expensive than paying rent. However, rents inflate over time, while homeowners should see their mortgage outgoings fall.
The obvious advantage of owning your own home is that when the mortgage is finally paid off, the home is then owned outright. However, a tenant must continue to pay the landlord and is at the mercy of evolving market trends. So if rents rise, there’s little you can do about it.
Therefore it is almost accepted wisdom that buying is better than renting; after all, owning a home is considered one of life’s great achievements.
In conclusion there are still those who will argue that renting is better than buying. But at the end of the day which would you rather have after 25 years, the title deeds to your home or a pile or rent receipts and three months’ notice to quit?
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