Buying a home can be a major financial commitment, and the upfront costs are often higher than renting. But over the long term, most people find that owning a property is a better value than renting. However, rising mortgage rates have made it harder for potential homeowners to save enough money to get on the property ladder.
Is it cheaper to rent or buy a house in UK?
The average mortgage repayment now stands at nearly PS1,000 a month, which is significantly more than the average monthly rental cost on the market. This has widened the gap between owning and renting, making it more expensive to buy than it was just last year.
It used to be that renting was the more expensive option, but recent interest rate changes and house price growth have narrowed the gap. But if you can manage to muster up a 10% deposit, it’s still cheaper to buy than rent in most regions of the country.
The biggest downside of renting is that landlords can increase the cost of your rent at any time, and a tenancy agreement typically only lasts for two years (although some have a break clause). This flexibility means you could be on the move again much sooner than if you owned your own home.
In a city like London, where home prices are soaring, it’s harder to see how a mortgage would be cheaper than renting – although it is still more affordable to buy than in most other areas of the UK. If you’re looking for a helping hand to reach your goal of getting on the property ladder, there are more than 130 5% deposit mortgage deals to choose from.