If we are lucky enough most of us will be able to buy a home, for others though this idea is a distant dream even though in the long run it could be a money saver.
Substantial Savings
In a recent report from Barclays it showed that, in a lifetime, getting onto the property ladder is much more beneficial that renting a property. By making a purchase this could save around £200,000 over the course of a lifetime.
This is based on a mortgage over 50 years and maintenance on the home but excluding the value of the property at the end of the mortgage. The average cost was £429,000 compared to £623,000 in rental costs over the same period.
The study shows that, to start with, it is cheaper to be a tenant but rental rates increase over time, especially at the moment when it is so hard to get onto the property ladder. Buying a property means financial security in retirement when pensions are often considerably less than a wage.
The head of mortgages at Barclays, Andy Gray has said, “The cost of stepping on or moving up the property ladder can be a big barrier for many, but the benefits hugely exceed the initial expense.”
Further Advantages
The study also showed that as the high rates of inflation increase the value of owning a property is considerably better as the mortgage will be paid off with the only expenses being maintenance and landlord insurance.
The report is based on the assumption that a first time buyer is in their thirties and will have a mortgage for 50 years and will never move. However, if the buyer was to trade up rather than a move sideways then this again increases the value of buying over renting.
There are huge differences in rental and property prices across the country but the results from the report show that overall buying a property will not only save money but also provide security later on in life.
However, although many of us can see the benefit of buying our own home it is not that simple. The biggest struggle is finding the deposit and depending on what area you live in, this amount can vary dramatically which means renting is the only option for a huge amount of people in the country at the moment.