Buying beats renting by £220,000 over a lifetime, bank claims

Buying a house in the West Midlands beats renting by more than £220,000 over a lifetime, according to one of Britain’s biggest banks.

Barclays claims the cost of buying a home, paying a mortgage and maintaining it in the region would total £350,000 over a 50 year period, while the total rent would be £570,000.

It gives the average house price in the region as £130,212 and year one rent as £7,552.

The average saving in England and Wales from owning over renting is £194,000, the bank said, with owner occupiers paying £429,000 over 50 years compared to £623,000 in rent.

And this figure does not account for the value of the home the buyer will own after paying the mortgage.

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.

“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.”

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 home buyer also has one-off financial hurdles of deposit, stamp duty and solicitor’s fees, and permanent aspects such as maintenance and insurance for his home.

But at the end of 25 years, the buyer will also own his home outright as the mortgage will have been entirely repaid, the bank said.

Over a fifty year span, roughly 50 per cent of the cost of occupying a home comes in the form of mortgage payments, with two fifths of that in interest cost, while the rest is capital repayment.

The next largest outlay is maintenance.

The initial purchase deposit is the next biggest cost, while insurance, stamp duty and other costs associated with buying the house in the first place make up the rest.