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High LTV mortgages cost more than rent – Hamptons

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  • 20/12/2013
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High LTV mortgages cost more than rent – Hamptons
First-time buyers with high loan-to-value mortgages will pay more per month than renting, estate agent research has found.

When Hamptons International compared the monthly repayment costs of a 95% LTV mortgage on a two-bedroom house with the cost of renting, it found renting was cheaper in almost every region of England and Wales.

Research director Fionnuala Earley said consumers had difficult choices to make: “On the one hand improving credit conditions and government help have made buying more accessible. On the other, relative to buying renting is still cheaper for many, particularly young, people.”

First-time buyers need at least a 24% deposit if buying a house is to reduce their monthly housing expenditure, the research found.

Buyers in London and the South face the biggest added costs if they decide to take a 95% LTV mortgage out. In only two regions – the North West and the North East – was it cheaper to buy.

In cash terms, this means Londoners will need a deposit of £57,200 to make buying cheaper, while those in the South East must pay £45,750. The average cost-effective deposit across England and Wales is £32,400.

This is not the first time the effectiveness of high LTV mortgages has been questioned. In November, the pressure group PricedOut argued the Help to Buy mortgage guarantee scheme will not help first-time buyers because of unaffordable payments.

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