Renters are £27,000 worse off than first-time buyers, according to the latest Halifax Buying vs. Renting Review. The average monthly rent in December 2017 stood at £754, while the average cost of buying a similar three-bed property, including mortgage payments, stood at £679.
Over a 30-year mortgage term, the difference between these two figures adds up to £27,000, which is not far below the average deposit of £31,751. And unlike when you own your own home, renters will not be able to use the extra £27,000 they spent paying rent later on in life, to release equity from their home for instance.
The gap between the cost of buying and renting has now grown to its highest level in four years. It's increased by 44% over the last year alone, with buying more financially attractive than renting throughout the UK. Russell Galley, managing director at Halifax, said that the increased gap was "primarily driven by a reduction in mortgage rates and a more competitive market pushing down monthly payments. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat."
Indeed, just last week we reported that first-time buyer rates are still falling. Additionally, the average monthly cost of buying has decreased by 22% (£192) since 2008, while rental payments have increased by the same 22%, or £138.
The main thing that seems to be holding renters back is the size of the deposit required to take that first step onto the property ladder. Saving up can be quite a challenge if you're losing a lot of your income to rent every month, which is why the Government has implemented the Help to Buy ISA and Lifetime ISA schemes to give people a bit of a boost.
Once you've got the required amount together, a top first-time buyer mortgage could help you save money and secure your future.
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