Mortgage Advice for First Time Buyers, First Time Buyer Mortgages and First Mortgage Advice

It is cheaper for first time buyers to purchase a home

17-Feb-2015

It is now cheaper for first time buyers to purchase a house than rent one, according to new findings.

Research published by Halifax showed that first time buyers in the UK are £742 (nine per cent) a year better off with their own home compared to those who rent.

Furthermore, the study showed that the average monthly buying cost associated with a first time buyer purchasing a three bedroom house stood at £6582 in December 2014.

This is £62 (or nine per cent) lower than the typical monthly rent of £7203 paid on the same property type. 

The findings also revealed that the price of a typical first time buyer home rose by eight per cent in 2014, along with associated monthly buying costs. However, at the same time, the number of first time buyers increased by an estimated 22 per cent in 2014.

This is equivalent to 326,500 first time buyers getting on the ladder – the highest annual total since 2007 (359,900).

Commenting on the findings, Craig McKinlay, mortgage director at Halifax, said: "Average home buying costs are significantly lower than average rental costs, providing first time buyers with a large financial saving if they can get on the housing ladder. 

"While the timescales associated with raising a sufficient deposit to buy a home present a hurdle to many potential first time buyers, 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."

Last year, first time buyers in London have, in cash terms, experienced the largest benefit from buying rather than renting a home.

According to the figures, the average monthly cost of £1,275 for those who have bought compares to an average monthly rental price of £1,387.

This represents a saving of £112 a month (£1,338 over the year) or eight per cent.

Repossessions drop

Separate figures published by the Council of Mortgage Lenders (CML) showed that the number of repossessions fell to 21,000 in 2014 - 26 per cent fewer than the 28,900 in 2013, and the lowest number since 2006.

The report also revealed that at 0.19 per cent, the repossession rate was also lower in 2014 than at any time since 2006.

Of the 21,000 total number of repossessions, 16,100 were on owner-occupied properties, and 4,900 were on buy-to-let properties.

Conclusion

The findings suggest that although house prices have fluctuated over the last couple of months, this has not appeared to have a detrimental impact on buyer demand.

Furthermore, despite some of the increases, purchasing a house still remains cheaper than renting. In addition, there have been fewer repossessions, suggesting that affordability is higher than it has been since 2006.
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Interest rates are low but could rise? Is this a good time to buy?

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Varialbe rate mortgages go up if bank interest rates do. Which is your preference?

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Shared equity mortgages allow you to buy a new home with 5% deposit and an equity loan through FirstBuy. What do you think?

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Rent to buy allows you to peg a property price, save towards a deposit and pay reduced rent. What do you think?

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