Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Question: I've rented a two-bed house for nearly seven years and my partner did the sums to work out that it's actually cheaper to have a mortgage on the property than carry on renting.
We pay £650 a month rent, while a 90 per cent LTV mortgage on the house is just £565.
Am I being grossly overcharged – my landlord annually raises rent by roughly 2 per cent – or do I have no option but to carry on saving until I can buy? It seems a ridiculous scenario to be in.
Rod B Lewis, Bristol.
Answer: First-time buyer frustration is palpable: when renting a property takes a bigger bite from your monthly finances than buying, it can feel like you're treading water with no sight of land.
The "rent-versus-buying" debate may be long-established – a longer-term preference for a shot at owning an asset to pass on to heirs versus short-term financial flexibility and greater freedom – but the worry is that obstacles to new buyers become the same.
The cost of buying a home is now typically 14 per cent lower than renting a property, thanks to lower mortgage rates affected by Bank base rate at an historic low, according to research by Halifax. "The average monthly costs associated with buying a three-bedroom house stood at £608 in March 2011; 14 per cent (£98) lower than the £706 average monthly rent paid on the same property type," the bank's report says. Compare this to 2008, when the average cost of buying was 43 per cent more than the typical rent paid.
Despite this improvement in buying affordability compared to renting, the tough post credit-crunch lending criteria stuck to by lenders – an average 27 per cent deposit, high interest rates for loan-to-values of 90 per cent or more – is making it all but impossible for many.
Whether you're being overcharged on your rent is difficult to calculate given the wild variances between property type, size, condition and length of contract. However, your 2 per cent annual rise is lower than the national average – 4.2 per cent – according to the property and letting agent LSL Property Services.
Andy Montlake of the mortgage broker Coreco says: "It may be a tardy method but it's tried and tested; saving a large enough deposit will be the key to unlocking the door to property."
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments