House Doctor: 'My rent is far higher than a mortgage at the moment. Do you think I'm paying too much?'

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The Independent Online

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."

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