While some may believe that renting is the cheaper choice for those on a budget or trying to save up enough money to buy a home, recent data has revealed that homeownership is actually the more affordable option.
New research from Santander analysed the average price of rent and mortgage payments in every region and found that no matter where you choose to buy a home, it will still cost less than renting.
Buying a home does, of course, require a large sum of cash just for the deposit, but once you’re actually on the property ladder, average mortgage payments stand at around £723.
This is no small amount of money, but in comparison to renting, you’d be saving yourself just under £200 a month (£189) as the average monthly rent in the UK is currently £912.
Although every region wouldn’t see savings in the hundreds, the region in which the gap between owning and renting is the narrowest is the East of England, only saving £43 a month by buying a home, but still saving money.
Renters in London have the most to gain by making the switch to homeownership, with rental rates at almost £300 more a month than mortgage payments in the capital.
These figures may come as a surprise to some, as in the past renting was always more financially feasible, however, since the economic crisis of 2008, interest rates took a fall while rental rates have consistently risen over the last decade.
The report found the average deposit for a home in the UK is currently £51,905 and discovered that many would try everything they can to get on the ladder, revealing that 38% of renters are considering moving in with their parents to save up for their deposit.
Managing Director at Santander UK - Miguel Sard - 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.”