Many people put off securing a place on the property ladder for financial reasons. The expense and saving that is required to get a home of your own can be pretty significant, and is enough to put many people off.

But if you think renting instead of buying is going to be more cost-effective each month, think again.

New statistics have shown that there has been a significant increase in the cost of rent since the start of the pandemic. This increase has not been reflected in the cost of buying, which has only increased by a comparatively small amount. 

What does this mean for anybody considering seeking a contractor mortgage, freelancer mortgage, or just a good old fashioned residential mortgage? Let Roots Mortgages explain. 

What’s afoot in the housing market?

Halifax is one of the leading lenders in the mortgage market and a significant authority when it comes to this kind of thing.

The building society has recently conducted a Buying vs Renting Review, in which it found that those who have bought their own home are currently spending significantly less than those renting their property each month.

This is chiefly due to increases in rental costs, which have risen sharply as a side effect of the pandemic.

What do the statistics say exactly?

To come to these conclusions, Halifax has used the model of a three bedroom house and compared the average mortgage costs with the costs of renting for the same property.

The data suggests that the average cost of renting has increased by 10% to £821-a-month over the course of the past year. Though mortgage costs have also increased, they have only done so by 1%. The average monthly mortgage costs for a three bedroom house is £753 according to Halifax’s findings.

This difference of just under £50 a month difference means that hypothetically, a person with a mortgage on their home could spend £600 less each year compared to somebody renting a home of the same size.

That kind of figure is not something to be sniffed at. But the benefits of this only really come once your mortgage is done and dusted. Getting to that stage is not always straightforward of course, and requires significant planning and saving in its own right.

It’s also worth bearing in mind that although only by a comparatively small amount, the average mortgage payment has still increased by that 1%. Additionally, the average first-time buyer deposit has also increased since the start of the pandemic last year. The Halifax report finds that that average figure is now just shy of £59,000, an increase of £11,677.

What does this mean for me?

The findings from Halifax show that the pandemic and subsequent effects on the wider mortgage industry have meant that neither the cost of buying or renting a home is overly appealing at present.

However, if you are in a position to buy a home rather than carry on renting, then once that process has been completed you could well save money on a month-by-month basis for some time to come.

There are of course plenty of things to factor in when buying a home. But with the return of 95% LTV mortgages, there are factors in place that can make securing a home of your own that bit easier at present.

This kind of statistic isn’t going to be the thing that makes you accelerate your mortgage plans. But it’s another reason why securing that perfect mortgage sooner rather than later can be beneficial to you. Getting some free mortgage advice can be a great first step towards making this happen.