Owning your home rather than renting it will save you £194,000 over 50 years, suggests a new study from Barclays, not counting the value of the home you would then own.
The report's figures suggest that the total cost of mortgage repayments, maintenance, and other costs which go into owning the average home come to £429,000 over a lifetime of home ownership. In comparison, renting a similar home over the same period would cost £623,000.
Adding in the value of owning your own home outright at the end of 50 years, the figure is over £595,000.
"The cost of stepping on or moving up the housing ladder can be a big barrier for many," said Andy Gray, Head of Mortgages at Barclays, "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.
Over the 50 years, around half of the cost of occupying your own home goes on mortgage payments, £210,000 out of the £429,000. Two fifths of that £210,000 is interest cost and the rest is capital repayment. The next largest outlay is maintenance at £170,000. The initial purchase deposit is the next biggest cost. I nsurance, stamp duty and other costs associated with buying the house initially make up the rest.
There is considerable fluctuation across the country. Buying a typical home in London would save the owner £396,000 compared to renting it over 50 years but in the South West the advantage is much smaller at £34,000 because rents are unusually cheap relative to house prices. The North West has the second lowest house prices in the country, but rather high rents and so the advantage of owning over renting there is the second highest in the country at £300,000.Reuse content