A low rate mortgage may be cheaper than renting.
According to recent research by Barclays those with a mortgage can end up paying up to £200,000 less over their life time than those who rent all their life.
A repayment mortgage on a house worth about £160,000 would require the home-owner to pay around £430,000 over the course of 50 years. This compares favourably to the amount that would need to be paid while renting.
Barclays researchers calculated that a house-hold paying rent for a similar property over a 50 year term would end up having to pay out almost £623,000.
Many first time property buyers when attempting to purchase a home are often hindered by high fees, high deposits and restricted mortgage availability. In order for these buyers to escape the rental trap lenders must do more to make their deals both affordable and accessible for the first time buyer sector.
A Barclays spokesperson commented on the research saying that the costs incurred by stepping on the property ladder can be barrier for some, however the initial expense is actually outweighed by the long term benefit of property ownership.
Home-owners not only save money owning the property they occupy, they can also benefit from the eventual sale of the property. Those left renting permanently will find themselves paying out pension income to a landlord.
As the BoE and Government has releasing cheaper funding to lenders it is hoped that first time buyers will benefit from lower rates and increased mortgage availability.
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