Getting a mortgage to purchase property saves money, according to Barclays, who’s research suggests that people will save almost £200,000 (GBP) over their lifetime by buying property rather than renting.
The bank put the average cost of renting a residential property over 50 years at £623,000 (GBP), compared to just £429,000 (GBP) for buying a property, paying a mortgage and maintaining home – making a difference of £194,000.
The Barclay’s study said that around 50% of expenditure goes on mortgage payments, with around 40% going on capital repayment and interest costs, over 50 years of home ownership.
Barclay’s head of mortgages Andy Gray said that whilst the initial cost of getting on to the property ladder “can be a big barrier” for people, due to high value of deposits now required, there are still clear long-term benefits.
As inflation rises, so does the value of owning a property. While rental prices rise and fall with inflation, once a residential mortgage is paid off, all a homeowner has to pay for is the maintenance of the property and annual insurance to protect it.
While it may be cheaper to rent in the short-term, over the long-term PRS rents will inflate and tenants will be no nearer to owning property, whereas after 25 years, a home buyer will own their home outright and have financial security in their retirement.
If only getting a mortgage was that easy…..
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