Zoopla survey looks at the benefits of interest only mortgages over renting

Some recent research which has been created by the popular property website, Zoopla, has shown that it could be cheaper for people to maintain an interest only mortgage than it is for them to rent property in the vast majority of towns around the country.

For example, the cost of renting a two-bedroom flat outside London is around £650 a month, whereas if a mortgage was taken out on the property and it was outright purchased, the interest on the mortgage would only be around £580 per month. This makes it around 15 percent more expensive for buyers to rent a property than it is for them to take out a mortgage.

The survey highlighted that some of the places with the biggest margin between the cost of renting and the cost of taking out a mortgage are Derby, Milton Keynes, and York. Many people would expect the London would be a more affordable place to rent than it would be to buy, however the study has shown that this is far from the case and on average the cost of renting is 17 percent higher than taking out a mortgage when you only pay the interest payments.

The cost of a two-bedroom flat in the capital city is currently averaging £480,000, and the rent on such a property is around £2400 per month. This would mean that if you chose to buy a property in the capital city, rather than rent, you would save around £4200 each year.