Renting vs Buying over a 10 year period
Renting can typically work out as an option that is cheaper than buying over a 10 year-period, according to a reported by Mortgage Introducer, when all other costs are taken into account, such as upfront and monthly payments.
“Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120 – a total cost of £81,965 when including the deposit."
“The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58% would mean a total repayment of £231,798, a total of £254,478 including the deposit,” says Mortgage Introducer.
The conclusion is that renting works out £172,513 cheaper on average across the UK over 10 years, but the big difference of course is that there’s no long-term benefit of the terminal bricks and mortar investment secured buy buyers.
Renters benefit from a cheaper deal over the short term, based on a 10 year period, and they have the freedom of the landlord being responsible for property repairs and emergency problems, plus renters have the flexibility of mobility, if job opportunities arise elsewhere. Renters also have the opportunity to invest the savings into other types of investment which may even out-perform property long-term.
More of us are choosing to rent over the long term and it seems that is can actually be a considerably cheaper option cmpared to property ownership, even with taking into account the record low interest rates.