Umbrella Exchange offer services for more than just payroll. CMME provides our clients with unbiased mortgage advice and solutions, specifically tailored to contractors. As mortgage experts, CMME have highlighted the reduction in the cost gap between buying and renting.

The cost gap is currently down to its smallest difference in nine years, but homeowners are still better off than renters according to Halifax research.

In 2017, the average annual savings for homeowners compared to renters was £900 per year. However, latest figures show that this has dropped by 59% to £366 per year.

When all costs are taken into consideration including mortgage repayments, insurance, maintenance, minor alterations, repairs and income lost by funding a deposit rather than saving, homeowners are still better off than renters in all parts of the UK despite this closing cost gap.

The managing director of Halifax, Russel Galley, said: “The gap between buying and renting is narrowing, primarily driven by reduced first time buyer prices deposits in some regions and continuing house price growth, meaning buyers are paying more on their mortgages.

“With more products available to borrowers, these factors combined have pushed up the price of buying quicker than the price of renting. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.”

How does this closing cost gap affect potential buyers?

It is well known that buying a home generally means significantly lower monthly costs than renting, however this research shows that the gap is becoming smaller in recent months.

London made the biggest savings, with buying monthly costs at £1,390 and renters at £1,763, a difference of 21%. Outside of London, Scottish buyers have the highest average annual savings over renting at 20% (£1,574).

The smallest average difference recorded in this research was in Yorkshire and Humber at 5%, with buyers saving £361 last year compared to renters.

Despite the changing figures amongst the average monthly buying and rental costs by region in recent months, buying a home still comes out as being a more cost effective option after taking into consideration all of the costs that come hand-in-hand with being a homeowner.

Why is the cost gap closing?

There are many factors that affect the cost gap between renting and buying, but the research highlights new buy-to-let mortgages are slowing down and house purchases with a mortgage are currently driven by first time buyers. In 2018, the number of first time buyers reached 370,000, while mortgages for buy-to-let purchase fell for the fourth year to 66,400, according to UK finance figures. However, re-mortgages have been rising and recent changes including higher stamp duty for new buy-to-lets and the removal of mortgage interest tax relief show the impact on landlords.

Next Steps

If you’re a contractor looking to get on the property ladder and save money on the difference between the cost of renting, CMME can help you find the best first-time mortgage for you by providing the knowledge, experience and connections you need. You can view more of our informative mortgage articles from CMME here.

At Umbrella Exchange we work with partners we trust. CMME provide our clients with unbiased mortgage advice and solutions. With direct access to banks and high street lenders in the UK market, CMME offers a range of mortgage products, some of which are exclusive to CMME and tailored specifically to the needs of their clients.

Proving that the financing process for contractors does not need to be as challenging as is often believed, CMME distinguish themselves from the competition by offering independent professionals mortgages that are both fair in terms of their employment status and affordable. As leaders in their field, they commit to the following four principles for their clients;

• Receive a mortgage offer that’s based on your entire income
• Be approved without having to provide accounts for the previous three years
• Borrow up to five times your annualised income
• Apply with only two forms of ID, such as passport and driving licence and copies of your current contract & CV

Don’t forget, Umbrella Exchange can help you with everything you need for your role as a contractor. Bringing together an extensive range of service options, including umbrella companies, contractor accountants, insurance brokers and mortgage lenders, we can present you with the best providers and even help you deal with the transition from your current set up.

Umbrella Exchange are not authorised to offer regulated mortgage advice. Umbrella Exchange is an introducer to CMME.

Your home may be repossessed if you do not keep up repayments on your mortgage.