With housing data that suggests house prices are rising, and equally worrying data showing rents are increasing too, it can seem impossible to know what to do for the best: buy or remain a tenant.
Home ownership in the North West is among the most affordable in the country. The latest figures from the Land Registry (July to August) show that the UK’s average house price is now £183,861. In London this is £488,782, while the North West remains one of the lowest regions on cost at an average of £114,064. In Chorley, for example, you would be able to buy a two-bedroom or three-bedroom home with a garden, which would be a great starter home and is suitable for a growing family.
According to Which? The average deposit for FTBs is around 17%. This means lads and lasses in Lancashire need to save approximately £19,000. The higher deposit you can save, the better the Loan to Value (LTV) ratio and, in theory, the better mortgage deal you can secure.
So, if we imagine you want to borrow £95,000 from the bank, and put down £19,000 on a house worth the North West average of £114,000, your monthly repayments will be around £555. This is based on a 25-year term at a 5% fixed interest rate on a loan that has an 84% LTV, and comes under the threshold for Stamp Duty too.
On the other hand, renting is affordable too. Not everyone wants to own a home: perhaps you’re a natural Nomadic type, you like the flexibility of renting and don’t want the responsibility of maintaining a property, or you want to take a year off and travel before you settle down.
Average monthly rents in England and Wales hit a record high of £804 last month, according to Your Move and Reeds Rains. In Lancashire this translates into a monthly rent that is much, much less, so don’t let this put you off.
We queried Hometrack’s online rental data for the PR7 postcode (Chorley) and confirmed it against our own data: a two-bedroom rental property will cost tenants between £450 and £550 per month, slightly more for a three-bedroom house.
Young professional couples will find this amount affordable if they’re committed to renting and not buying, though if you’re sitting on the fence about whether to rent or buy, the notable factor is rent and mortgage repayments on similar properties are around the same.
So if you’re fortunate enough to be able to borrow from the bank of Mum & Dad then buying a house may be the best option and will give you that advantage of owning your own home with the potential of making capital increases in the future.
There’s always more to deciding whether to buy a house than just the money; it’s a big factor though. The housing market is recovering and house prices are increasing, so make sure you’re fully informed. If you’ve never seriously considered mortgages before, maybe take a look at our Mortgage Guide to find out more.