When it comes to finding somewhere to live, it has previously always been a given that it is cheaper financially to buy a home and pay a mortgage on it, as opposed to renting.
However, according to new research, it is now cheaper for the first time since 2014 to rent a property rather than buy one. High demand from potential buyers, plus a shortage in the number of properties being available has continued to increase property prices. In the earlier part of 2021, rental tenants apparently typically spent £71 a month less in rent than if they were repaying a mortgage on a 90 per cent loan-to-value home loan for the same property.
The cost to rent a property in this example would be £1,054 a month, against £1,125 a month for mortgage repayments on the same home.
Travel back to last March 2020 though, and a buyer with a 10 per cent deposit would have been around £102 a month better off buying that home rather than renting it. Now in the UK it’s only cheaper to buy a home rather than rent in four areas: the North East and the North West of England, Yorkshire & Humberside and Scotland.
With reasonably cheap mortgage deals, the stamp duty holiday and buyers increasingly keen on more space to live and work from home, the pandemic has prompted an unprecedented boom in the property market in many parts of the country.
So which option is right for you?
Pros of buying a property…
– One of the top things about buying a home is that once the mortgage is paid off is that you will own the property outright and have the security of always having somewhere to live.
– If the home you buy increases in value over time, you will be able to take advantage of the equity in the future to help you buy a bigger home or fund your retirement.
– When you buy a property, you can really put your stamp on it decor or renovation-wise, without having to ask a landlord, something tenants are often tied to.
– In some circumstances, but not all, it can be cheaper to buy a home as opposed to renting one.
Cons of buying a property…
– Buying a home is a major commitment and you need to have stable finances in order to take on a mortgage.
– Maintenance costs like having to invest in a new boiler or roof can be really pricey after you buy your own home.
– Interest rates are very low in the current climate, but they do increase at some point then mortgage repayment costs could increase.
– If the value of your home falls, you might be unable to sell if you owe more to your mortgage lender than your home is worth (otherwise known as negative equity).
– You have less flexibility than when renting. Selling up is more expensive and takes longer.
If you’re thinking of buying a home in the Bromley area, then give us a call today with your requirements. Equally, if you’re thinking of selling, we’re always looking for new properties to put on the market for an increasing number of potential buyers.