Rent is now “cheaper” than a mortgage but there are still reasons to get on the property ladder

Posted on

House prices have soared over the last year and it means that renting a property is now “cheaper” than making mortgage repayments. Yet, while monthly costs could be higher for aspiring homeowners, there are still reasons to get on the property ladder now.

For the last six years, it’s been cheaper to pay a mortgage each month than it has to pay rent. According to the BBC, before the pandemic, people buying a house with a 10% deposit were £102 better off than renters each month. Now, tenants are better off by around £71. The reversal comes despite a 7.1% rise in average rents over the last 12 months, demonstrating just how much house prices have increased.

It’s suggested that among the reasons for this are:

  • Rental demand dropping when the pandemic led to young adults returning to live with families
  • City living becoming less attractive.

While the figures suggest renting is cheaper now, with a long-term view, buying a property is likely to make more sense financially if you can.

4 reasons aspiring homeowners should still consider buying a property

Buying a home isn’t the right decision for everyone or now may not be the right time. However, if you’re thinking about delaying plans simply because renting is now cheaper, there are reasons to still take the plunge and purchase a home.

1. In the long term, buying can save you money

While a mortgage could mean you end up paying more out now, if you keep up with mortgage repayments, you’ll eventually own the property and repayments can stop. In contrast, if you opted not to buy a home, you’d have to keep making rental payments indefinitely. So, if you take a long-term view, buying a home can be cheaper.

2. Your mortgage costs could reduce over time

As you build up more equity within your home, the interest rates you’re offered are likely to be more competitive. As a result, your regular repayments may fall over the years. While this isn’t guaranteed, homeowners often find their mortgage repayments become more manageable as they near the end of the term.

3. Properties are likely to increase in value

You can also view buying a property as an investment. House prices have experienced dips in the past, but historically they have risen. According to the Halifax House Price Index, house prices have increased by 9.5% in the last year alone. That’s the equivalent of £22,000.

4. It’s a chance to put your stamp on your home

When you’re renting, you may have restrictions on what you can do, such as decorating, and you don’t want to invest in the property by buying a new kitchen if it’s not yours. With your own property, you’re free to put your stamp on it and really turn it into your home. It also means you can invest in the property to make it suitable for your long-term needs and potentially increase the value too.

How can you reduce your mortgage costs?

With the cost of a mortgage rising, it’s more important than ever to find a mortgage deal that’s right for you. Securing a deal that has a competitive interest rate could mean your monthly repayments are lower and you could save thousands of pounds in the long term. Interest rates are low but even a small difference can have an impact.

The table below highlights how your monthly repayments and total interest would change depending on the interest rate if you borrowed £200,000 over 25 years to buy a home.

Source: Money Saving Expert

Taking the time to search the market for a competitive mortgage deal could save you money. While some lenders have a high street presence, many don’t. It can also be time-consuming to search, as well as complicated if you’re trying to understand if your application will be accepted. This is where a mortgage broker can help you.

A mortgage broker can also help you find a deal that matches your needs. For instance, a mortgage that doesn’t require upfront fees or allows you to overpay to be mortgage-free sooner.

If you’d like to discuss buying a home and securing a mortgage, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

We aim to keep our clients up to date on interesting and relevant financial news.

You can sign-up to receive our monthly newsletter by email, even if you’re not yet a client. Sign-up using the form below.

Client testimonials

I have always found Black Swan to be caring and understanding of my quirky lifestyle. I always feel they try to get me the best returns while respecting my current needs.

Sally Muir

A client since 2011

We would be very happy to recommend the support and service we receive.

Valerie Locks

A client since 2010

I have always been completely useless regarding finance - thankfully our financial adviser is not! I've retired with far more than I ever expected and investments continue to grow safely. So - thank you!

Bernadette Jane Warner

A client since 2000

Very happy with the professional service I have received and feel a lot happier now with my finances put in order.

Martin Field

A client since 2011

Julie Cooper was recommended to me by a work colleague. She has been very helpful, professional and has explained everything well. I would definitely recommend her services to anyone else who are interested in a financial review.

Steven Rooke

A client since 2018

…Service has been first class.

Hugh Fells

A client since 2012

My face to face meetings with Rob Young and Jessica Lyons have always been very open and understandable. My questions have been answered clearly and I have left feeling that my financial matters are in good hands.

Sandra Jack

A client since 2000

[A] safe pair of hands in a complex financial world.

Gary Middlehurst

A client since 2003

A reliable company with good communication skills and good knowledge of the financial markets.

Alan Evetts

A client since 2014

Maureen Pembridge is a long-time trusted advisor to our family. The market might fluctuate but her attention to detail is consistent.

Linda Burnard

A client since 2000

I am pleased to recommend Julie as a trustworthy financial advisor. She explains financial jargon in plain language, and always listens carefully to my particular financial needs and has helped me make the best of my savings.

Carolann Samuels

A client since 2010

I have always been satisfied with the way that Black Swan has handled my account. And I have always found the staff very helpful whenever I need to call the office.

Robert Anthony Matthews

A client since 2012

An excellent personal service from a person I know and trust.

Michael Dalton

A client since 2010

I am getting a very good services from Black Swan, they have got my investments sorted out which was in a bit of a mess.

Roy Jakens

A client since 2012

A good, efficient team providing clear ideas to shape a winning strategy.

Adrian Michael Levenstein

A client since 2011

Black Swan is a company to be trusted, with friendly staff and professional advisors.

David Brian Jennings

A client since 2017

I have been with Black Swan for many years. I have never wished to change anything. They give a good straight forward service.

Martin Barrett Brooks

A client since 2010

Andy Peters has been invaluable in firstly combining several pension pots and then giving excellent investment advice. It has given us a great deal of comfort to know that our financial affairs are in such good hands.

James Guillum Scott

A client since 2014

I find my financial advisor easy to talk to and feel that she understands my lifestyle. She is always available for help when I need her and explains in words that I can understand.

Margaret Ena Glasgow

A client since 2000

Andy is a first rate Director, excellent communicator and leader.

Ross Perry

A client since

Black Swan Financial Planning and Andrew in particular, are very clever at working out how risk averse we are, and coming up with solutions that we feel comfortable with. We are happy in the knowledge that we can continue to enjoy a comfortable retirement. Andrew Peters is a very, very friendly person who is great to chat to and easy to deal with. He explains things very clearly in layman’s terms, and if we still don’t understand, he explains it until we do!

Alan & Jane Dyer

Clients since 2012

We have always found Rob [Young] to be very approachable and knowledgeable. We have every confidence in the advice given and feel comfortable with the decisions we’ve made. There are certain opportunities that we wouldn’t have known about if Rob hadn’t brought them to light, which makes the advice good value for money as far as we’re concerned.

Peter & Pauline O’Halloran

Clients since 2013

Rob [Young] is extremely knowledgeable. I knew nothing about the different types of trusts which will not only secure my income in retirement, but also leave a legacy for my children. I’m glad that I sought his advice when I did.

Sarah Wilson

A client since 2015

I am extremely happy with the service afforded to me by the company and my adviser Julie Cooper.

Geoff Coxell

A client since 2010

My wife and myself have been dealing with Black Swan for a number of years. We have met with different representatives from the company over the years and have found all very helpful in their own way. We met with James [Anderson] a few years ago and found him very helpful and knowledgeable. He keeps in contact with us on a regular basis. We find the Company information very helpful and we feel very secure with our finances.

Andrew Kirchen

A client since 2015

I have always found my adviser to be easy to contact, very professional in his approach, yet friendly and understanding. I have a sense of an experienced company behind him, really on the ball financially and with good standards.

B McBean

A client since 2011

Partner with the most reliable and experienced team of advisers

Enter your details & we'll be in touch to discuss your needs.
Alternatively, contact us directly and speak to a member of the team.

    Subscribe to our newsletter