Happy Mortgage Freedom Day! | moneyfacts.co.uk

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Published: 19/04/2017
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Research from Halifax shows that today, 19 April, is this year's UK Mortgage Freedom Day – the day when new borrowers will have earned enough to pay off the annual cost of their mortgage. So, are you celebrating?

Counting the cost

The figures are based on the average annual mortgage repayment of £7,584 for a new borrower – including both first-time buyers and homemovers, with the repayment figure based on average house prices and a typical loan-to-value (LTV) of 70% – and the average net annual income of £26,810 (according to official statistics).

Using these amounts, Halifax has calculated that homeowners with a mortgage will have today earned enough on average to cover their mortgage payments for the rest of 2017, based on typical mortgage rates. Mortgage Freedom Day this year equals that of last year, despite rising house prices, with the slightly higher average income and lower mortgage rates balancing it all out.

However, as may be expected, there's a wide variation across the country: homeowners in Scotland, for example, achieved mortgage freedom on 14 March and those in Northern ireland enjoyed it just a day later, while homeowners in Wales had to wait until 23 March to celebrate. Those in England will have to wait a few more days (until 27 April), and for Londoners this key point doesn't arrive until 27 June, largely due to differences in house prices across the country, which create different stages of mortgage freedom.

But what about renters?

Despite the costs involved with homeownership, those who rent their property could find it even tougher: renters won't achieve rental freedom until 6 May, 17 days later than their home-owning counterparts and a day later than it was last year. This is because rental costs are typically higher than mortgage repayments – and have risen further in the last year – which highlights how much pressure renters are under.

Regional variations are broadly similar to that of mortgage freedom, with northern regions typically achieving rental freedom sooner than London, as renters in the capital have to wait until 29 July while several northern regions have already achieved it.Again, this is due to the differences in rental prices across the country, with those in London shelling out far more.

Craig McKinlay, mortgage director at Halifax, commented on the findings:

"Whilst it excludes other living costs, the research highlights a divide between the North and the South, with those in the south having to wait longer to reach 'mortgage freedom' than their counterparts in the North."

"{However, it also] confirms that homeownership is still cheaper than renting. 'Rental Freedom' Day falls 17 days after 'Mortgage Freedom' Day, showing that, despite barriers to property ownership, homeowners are still better off than renters."

What next?

It may be challenging to take that first step on the ladder, but as the research shows, doing so could mean you're far better off in the long run. Homeownership costs are far lower than typical rent payments, so start saving as much as you can to make the jump – read our guide on saving a deposit to get started, and familiarise yourself with the mortgage market by checking out the best first-time buyer mortgage deals, so you know the kind of thing you're aiming for.

If you're already a homeowner, knowing that you've earned enough to pay off your mortgage for another year should be a reassuring thought, but you of course still need to keep up with your monthly repayments. It's likely to be your biggest outgoing, so why not get the best deal possible? Compare the best mortgage rates to see if you can find a lower rate and cut your repayments in the process – that way, you may be able to celebrate your own personal Mortgage Freedom Day even earlier!


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