Owning your home rather than renting it could save you £194,000 over a 50 year period, a new study suggests.
On average, buying a property, paying a mortgage and maintaining a home costs £429,000 over a person’s adult lifetime, since first time buyers typically purchase in their early thirties, according to research by Barclays.
But renting a home over the same period would cost £623,000.
Initially, being a tenant is often cheaper than being an owner, as mortgage repayments tend to be higher than rental costs, but rents inflate over time, the lender said.
The home buyer also has one-off financial hurdles of deposit, stamp duty and solicitor’s fees, and permanent aspects such as maintenance and home insurance.
However, at the end of 25 years, the buyer will also own the property outright as the mortgage will have been entirely repaid. This increases the advantage of owning over renting to £595,000, according to the bank.
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.”
Figures vary enormously from region to region, due to the differences in rents and house prices across the country. For example, in London, buying a typical home would save the owner £396,000 compared with renting it over 50 years, because house prices in the capital are high.
By contrast, in the South West, the advantage is very small – just £34,000 – because rents are cheap relative to house prices, the bank’s analysis indicates.
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