Home Owner Loans Could Cost Less Than Renting
Over the course of the past couple of years or so, the demand for rental property has gone through the roof. This is largely due to the fact that many people who would like to get on to the housing and home owner loan ladder, believe they simply can not afford the repayments on a loan or mortgage.
In actual fact, because increased rental demand has pushed up the average rent on a property by a significant amount, it is now often cheaper to make repayments on a home owner loan or mortgage, than it is to make rent payments each month.
The news comes from research which has been conducted by Zoopla.co.uk, who have found that the monthly cost of a typical home owner loan repayment is now cheaper than renting the equivalent property across 80 per cent of the towns and cities in the UK.
In some cases, the difference between a loan cost and rent can be as much as 40 per cent. One example given by the research showed a typical rent of £785 per month, when an interest only loan for an equivalent property would only cost £554 per month.
So the simple question is: why doesn’t everyone who is currently renting a property, rush out and get a home owner loan or mortgage and buy a property?
Of course, the obvious answer to this question is that many would be first time buyers simply can not raise a sufficient deposit to meet lenders maximum loan to value criteria and even if they can obtain a suitable deposit, many still fail lenders’ underwriting processes during the loan application stage on things like affordability factors.
And so the problem remains for many people who are renting, frustrated by the fact that they can’t afford to buy a house, but that the loan repayments would actually be cheaper than the rent they are currently paying!
