A new study has concluded that paying a mortgage rather than renting privately could leave the average consumer £350,000 better off over next 30 years.
The study from the Intermediary Mortgage Lenders Association (IMLA) reveals that while private renters might expect to pay out £451,600 over the next 30 years, taking into account a projected increase of 2% in rent per year, a home owner on a 25 year repayment mortgage could pay £317,900 if interest rates remain at current levels.
Over a 30 year period, a home owner would pay £133,700 less than a private renter. When adding the accumulation of equity, the average home owner could be £352,500 better off over the next 30 years than if they were to rent the average privately rented property, without factoring in any potential increases in house prices.
Beyond 30 years, the home owner would benefit even further as they would no longer face mortgage payments, whereas someone who was renting would continue to have to do so into and throughout retirement.
The research from IMLA highlights the potential financial disadvantage facing those who do not or who are unable to step onto the housing ladder now, even if house prices don’t increase. Taking into account any house price inflation, the financial advantages of owning a home could be even higher.
John, Branch Manager at Click Estate Agents, said; “Becoming a home owner is a life changing experience. The study conducted by IMLA shows the extent to which owning a home can transform your long term finances. It also illustrates the potential financial disadvantages facing those who are not able to step onto the housing ladder”
If you’re looking to become a homeowner, Click Estate Agents can provide a one-stop shop, from finding your dream property to working with solicitors and mortgage advisors.