When it comes to the renting versus owning debate, it would seem that just on outgoings alone those with their own home will be forking out £133,700 less over the next three decades, according to the analysis.
But, on top of this, there is also the additional equity to be gained from paying off the mortgage which, if there is no house price inflation, would be £218,000 on average.
Barriers to homeownership
Yet this number crunching, which has been carried out by the Intermediary Mortgage Lenders Association (IMLA), has not only highlighted the benefits of homeownership.
It has also thrown the spotlight on the disadvantages faced by those who are struggling to get a foothold on the property ladder.
Indeed, IMLA’s findings show mortgage rates would need to top 11.5% throughout the life of the loan before it reached the level of costs involved in renting. This is well beyond the comfort levels of most mortgage lenders when assessing affordability.
Calls for change
Now IMLA is calling on the Government to take a look at how mortgages are regulated to see whether rules are excluding some consumers from homeownership.
It wants them to look at restrictions on lenders put in place following the financial crisis which mean homeownership – and the associated financial benefits – are now only open to those who can find bigger deposits or seek help from family or friends simply to be eligible.
Kate Davies, executive director of IMLA, said homeowners saved hundreds of thousands of pounds compared to their private renter counterparts.
Yet despite these benefits there had been a ‘marked’ decline in homeownership amongst younger people.
“People who have been renting privately and comfortably making their monthly payments are struggling to obtain a mortgage with the same or even lower monthly payments,” she said.
“We think that now would be a good time for the Government to take stock and assess whether current mortgage regulation is working as intended, and in the interests of UK plc.”
