Why rent when you can buy?
Posted on June 10th, 2020Housing is arguably the most expensive thing you have to afford day to day. Because of this, it’s easy to see how people can be tempted by the initially low cost of renting. However, we’re here to tell you why we think buying is much better than renting in the long run.
More room for individuality
We all know that rental accommodation can be creatively constraining. If you even so much as want to paint a wall, you must have written permission from the landlord – and don’t get us started on replacing furnishings!
When you own your own home, you can do whatever you like with it; put up wallpaper, or hang a picture… make your house truly yours. You can also have as many domestic pets as you like, which is definitely rare with rental accommodation.
Rent prices on the rise
Rental accommodation is an increasingly popular way of living. In fact, a study from the BBC shows that since 2008, the number of private rental lettings has been dramatically more than the number of home purchases each year. So, why is that?
As we mentioned, the initial cost of renting is a lot less than the initial costs of buying a home. Deposits, mortgages, and other fees can be quite daunting for the average UK citizen, especially when you consider that average weekly earnings are only around £464pp. It, therefore, makes sense that so many people are renting rather than buying.
On the other hand, rent is becoming increasingly more expensive. On average, Brits will spend around 1/3 of their total income on rental costs. This figure doesn’t even cover bills or living costs. When you compare these costs with that of a mortgage, it soon becomes clear which option is most affordable in the long-term.
Mortgage over rent
When analysed over a lifetime, renters will spend on average 280% more on rent than homeowners will on their mortgage. What’s more, there will come a time when you no longer have to pay a mortgage, as every payment will chip away at the debt over time. The same cannot be said for renting. Whatever money you pay will go directly into your landlord’s pocket, which you receive no benefits or security from.
To show you an example of how much more affordable a mortgage can be, we’ll use one of our stunning new homes at Falcon Rise, The Lawton. It has a price tag of £267,500 and is available with the Help to Buy scheme.
- Minimum deposit would be £13,375 (5%)
- Government loan would be £53,500 (20%)
- Overall mortgage would be £200,625 (75%)
Over a 30 year mortgage period at the average 2.63% interest rate, you could pay off your mortgage for the affordable cost of £806 per month.
There’s plenty of help when buying a home
If you’re struggling to see how you could afford the initial upfront costs of buying a home, never fear. Nowadays, there are so many helpful saving and buying schemes available.
The most common scheme is the government-backed Help to Buy, which allows you to borrow up to 20% of the value of your desired new build home on an equity loan (up to £250,000 property value). This then means that you will only need a 5% deposit, which is much more affordable. As well as the loan, you can also receive up to £3,000, completely free from the government when you save at least £12,000 into your Help to Buy ISA.
As well as this, we at Seddon homes have a few other programmes that we offer to our customers to help you along the way. One that many new homes buyers find particularly useful is Deposit Builder, a financial advisory system that we have in place to help you set up a savings plan with affordable monthly goals. We reserve your chosen Seddon home whilst you save so that there’s no chance it will slip away!
As you can see, there are many reasons why buying a home can be better than renting. If you have any questions about buying your very own Seddon home, please get in touch. And whilst you wait for our reply, why not have a look at our stunning new homes? Who knows, you could find your dream home!
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