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April 2015 Newsletter – Better To Buy

April 3rd, 2015 | No Comments | Posted in Monthly Newsletters

Better to Buy

New research by the Halifax has shown that First-Time Buyers (FTBs) in the UK are on average 9%, or £742, better off a year by purchasing their own home compared to renting. The average monthly repayments and buying costs a FTB faces with a three-bedroom property stood at £658 in December 2014, which calculates to £62 lower than the typical monthly rent on a property of the same type, which itself was £720 for the same period. The gap is widest in the North West of the UK, where FTBs were actually seeing a saving of £109 a month, a substantial 17% less than the cost of renting.

Despite current concern that the UK is not building the 230,000 homes a year needed to supply the demand, the number of first-time buyers in 2014 rose by 22% from 2013 to 326,500, the highest total since 2007. Considering that the monthly cost of buying was actually £15 higher than renting as recently as 2009, it is no surprise that people are now keen to escape the costly rent trap, despite the continuing climb in house prices. Craig Mckinlay, Halifax Mortgage Director, suggests that the “significant difference in costs between buying and renting, combined with still low mortgage rates, increased consumer confidence and the Help to Buy scheme, have all been factors driving the substantial rise in first-time buyers over the past two years”.

As the cost of renting has risen twice as fast as the cost of buying in the last five years, there is currently a real incentive to get onto the property ladder as soon as possible. With so many low rates available, it is worth talking to your adviser about your financial situation and to see if you can buy your dream home sooner than you think.

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