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Time is ripe for first time buyers

Time is ripe for first time buyers

Category: Mortgages

Updated: 15/06/2010
First Published: 15/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The time could be ripe for first time buyers to make their first steps onto the property ladder, as rising rents have meant buying is likely to be cheaper in all areas of the UK apart from London.

Average monthly rental prices are now higher than average mortgage repayments in every part of the country other than the capital, figures from Santander show.

The average monthly rent in the UK (outside London) is £420, compared with average monthly repayments of £334 for first time buyers.

This means that an average first time buyer outside of London could save an average of £87 a month once they have secured their first mortgage, or £1,040 a year.

Unfortunately for those potential first time buyers in the capital, they would be financially better off continuing to rent, although buying would give them a saleable asset, which renting does not.

Average rental prices in London are roughly 56% more than the average in the rest of the UK, at £701 a month. However it would cost buyers an average of an additional £359 to buy.

Phil Cliff, director of mortgage marketing at Santander, said: "People have been justifiably cautious in approaching the housing market in recent months but this research strongly supports the idea that in the majority of cases owning can be less expensive than renting.

"The first few months of 2010 have seen rents start to climb which has meant that the savings to be made for potential first time buyers have grown considerably. We hope the new Government honours the last's pledge on stamp duty to continue support for the FTB market and help those considering getting on the housing ladder to buy rather than rent."

Figures also show that first time buyers are purchasing property that is priced around the £115,000 mark, and are typically applying for a 75% loan-to-value (LTV) mortgage.

Anybody in the position to pay down 25% of a house's value may want to check Moneyfact.co.uk's Mortgage Best Buys, which include 75% LTV two year fixed rate mortgage offerings from Yorkshire BS, The Co-operative Bank and ING Direct (UK).

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