Buying cheaper than renting in some cities

Being a tenant is never easy, and now more than ever – the cost of renting a typical first time buyer property is 9.7 percent more than actually taking the plunge and opting to buy, according to Zoopla.co.uk.

At least it is if you choose an interest-only mortgage, charging a rate of 5 percent.

Nicholas Leeming, business development director of Zoopla.co.uk, said: 'The relative cost of renting as opposed to buying has increased over the past 12 months as rents have risen and house prices and interest rates have remained flat.

'Almost 750,000 would-be first-time buyers have reluctantly ended up as renters over the past three years as a result of being unable to get a mortgage. With current house prices and interest rates where they are and with rents on the rise, for those who can get a mortgage, there may never have been a better time to buy.'

Sounds good, but, as Phil Collins would say, think twice, before you consider getting a mortgage on an interest only basis. It is afterall, just treading water, the equivalent of paying rent, and you won't start chipping away at it until you switch to a capital repayment.

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