Getting on the property ladder can result in huge financial benefits, according to new research, that claims over a 50 year period owning a home rather than renting will save a person £194,000.
The average total cost of buying a property, the mortgages and maintaining a home comes to £429,000, but this doesn’t include the value of the home at the end. This compares with £623,000 in rent payments, the report from Barclays found.
So, although being a tenant is often cheaper than owning, as mortgage repayments tend to be higher than rental costs, rents will inflate over time.
Therefore owning a property means financial security in retirement as buyers will be expected to have repaid their mortgage and own the home outright after 25 years.
Andy Gray, head of mortgages at Barclays said: ‘The cost of stepping on or moving up the housing ladder can be a big barrier for many, but the long term benefits hugely exceed the initial expense.
‘Not only will you save money by becoming an owner occupier, but you will also own a substantial asset once your mortgage is paid off, providing financial security for your old age.
‘Those who choose to rent permanently will have to pay their landlord out of their pension income, while owner-occupiers will enjoy minimal housing costs.’
The figures are also based on the assumption that the buyer and renter never move, but trading up the housing ladder for both groups would increase the relative value of ownership over renting.
And for home owners living in London, the news is even better. Despite having the highest house prices in the country, at an average of £343,522, the report suggests that the lifetime cash savings from owning over renting in London would be a whopping £396,049.