The Council of mortgage lenders has recently released new research which has highlighted the difference in cost between renting and buying property. It has been designed to help people make the decision about whether they should be renting a property, or buying one.
Many reports in recent years have shown that taking out a mortgage, and paying for a house, is actually a cheaper option than renting. However other reports said the contrary, saying that home ownership is still a more costly option.Even if you ignore the significant costs of raising enough money for a deposit, there are still several big charges associated with buying a property, instead of renting one.
One of these is that when you purchase a property you are going to only be paying the percentage of the property which is covered by the mortgage, you will have to factor in the cost of the deposit into monthly payments in order to get an idea of total monthly costs. If you are renting, the total cost is the cost of rent, as you do not already own a portion of the property.
If you include the cost of the deposit, suddenly purchasing a house doesn’t look so favourable. It is estimated that when you consider this factor, around 70 percent of first-time buyers will be finding it more expensive to buy than rent. However when you do not factor in a deposit, buying is cheaper 80 percent of the time – but unfortunately this is not an accurate picture.
There are also several other costs associated with buying instead of renting. For one, maintenance costs can be expensive and these are something that would be covered by a landlord in a rental situation.
The director of the Council of Mortgage Lenders is Paul Smee and he has commented, “These figures can offer some guidance to people, but it is important to remember that finances are not the only thing people should be considering when buying a house. Emotions about purchasing a home also play a part and just because it might be cheaper, doesn’t mean it is always the best option for you.