Buying a property '£200k cheaper than renting'
19th Jun 2012
Buying a property works out almost £200,000 cheaper than renting over the course of a lifetime, according to a new report by Barclays.
Research carried out by the bank indicates that buying, paying mortgage and maintaining a home costs £429,000 over a period of 50 years, compared to £623,000 in rent – a difference of £194,000.
Over a 50-year span, roughly half of the cost of occupying your own home comes in the form of mortgage payments - £210,000 out of the £429,000, with two-fifths of this being interest cost, while the rest is capital repayment.
The next largest outlay is maintenance, at £170,000, while the initial purchase deposit is the third biggest cost, and insurance, stamp duty and other costs associated with buying the house in the first place make up the rest.
The data does vary by region, however, as buying a typical home would save the owner £396,000 compared to renting it over 50 years, while in the south-west the advantage is very small at just £34,000, because rents are unusually cheap relative to house prices.
Andy Gray, head of mortgages at Barclays said the cost of stepping on or moving up the housing ladder can be a big barrier for many, but the long-term benefits hugely exceed the initial expense.
"Not only will you save money by becoming an owner occupier, but you will also own a substantial asset once your mortgage is paid off, providing financial security for your old age," he commented.
"Those who choose to rent permanently will have to pay their landlord out of their pension income, while owner-occupiers will enjoy minimal housing costs."
Posted by Staff Writer: Robin Stenson
© Zoopla Property Group Limited