Take the mortgage plunge, first-time buyers advised

Fri, 09 Oct 2009

According to recent research, potential mortgage borrowers would be better off buying a house rather than renting one. The news follows steep falls in house prices and record interest rate lows. Research by high street bank Abbey found that first-time buyers throughout the country (apart from London) could save over 50 pounds per month by getting a mortgage loan and buying a house.

According to the report, house prices falls have shaved 9% off the cost of a first-time buyer house outside London over the last year. Basing their calculations of an average first-time buyer property price a little under 100,000 pounds, the bank calculated that those with a 25% deposit could have average mortgage repayments of just under 400 pounds.

However, for first-time buyers in London the equation doesn’t work out. To save money on a rental cost of 650 pounds per month, buyers would have to find property costing less than 158,000 pounds... not an easy feat in London. The study shows that in most cases first-time buyers could save money by getting a mortgage loan, not to mention the long-term potential of capital accumulation.
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