Financial benefits of owning a home
First-time buyers could potentially save £2,268 a year on average if they can get on the housing ladder rather than rent – provided they can raise a £51,000 deposit – research has found.
The study, from Santander Mortgages, weighed up the potential cost of home-owners’ monthly mortgage payments against what they could expect to pay out by renting.
It discovered that, across the UK, there were potential savings to be made by being on the property ladder. But it also found the average first-time buyer deposit needed is £51,9052.
Once on the property ladder, firsttime buyers could expect monthly mortgage repayments of £723 on average, compared to an average rent of £912 per household, the report found.
This means home-owners could save an average of £189 a month – or £2,268 a year – compared with renters.
First-time buyers in London could potentially make the biggest saving by getting on the property ladder, Santander found.
It said the average monthly rent there is £289 higher than monthly mortgage payments – a potential saving of nearly £3,500 per year. But this would be based on first-time buyers in London needing to raise a deposit of nearly £135,000, according to the calculations.
Santander found the smallest difference between rent and mortgage payments is in the East of England, at £43 per month – just over £500 a year.
The research, which used average rents from the Homelet index and Office for National Statistics house price figures, made several assumptions about a first-time buyer’s mortgage payments, including that they would have a 24% deposit, a mortgage rate of 2.48% and be paying off what they owe over 25 years.
Miguel Sard, managing director of mortgages at Santander UK, said: “Of course, buying a property is a major financial investment with up-front costs to consider, but long-term the financial benefits can be significant.”
Here are the costs of buying versus renting, according to Santander, with the average rent followed by the average first-time buyer house price, the average first-time buyer deposit, the average monthly first-time buyer mortgage repayment, the amount someone could be better off by per month by buying and how much they could be better of by per year:
■ Wales: £596, £146,557, £27,135, £535, £61, £732
■ London: £1,569, £420,500, £134,660, £1,280, £289, £3,468
■ Northern Ireland: £629, £131,076, £30,435, £451, £178, £2,136
■ North-West: £689, £29,877, £537, £152, £1,824
■ Scotland: £644, £142,329, £28,311, £510, £134, £1,608
■ Yorkshire and Humber: £623, £143,810, £27,527, £521, £102, £1,224
■ West Midlands: £679, £168,287, £35,207, £596, £83, £996
■ South-West: £799, £50,514, £723, £76, £912
■ South-East: £998, £67,866, £935, £63, £756
■ North-East: £509, £22,712, £450, £59, £708
■ East Midlands: £622, £161,682, £32,816, £577, £45, £540
■ East of England: £905, £252,158, £59,553, £862, £43, £516 £149,816, £212,062, £276,807, £123,189,