Share a Mortgage to gain money over renting


Share a Mortgage has calculated that renters of London properties can lose £2,300 or more every month compared to those buying. In fact, taking current trends into account, buyers could make a healthy profit of nearly £30,000 than if they were to sell up after two years. 

Below, we consider the differences between buying and renting in Hammersmith & Fulham as an example of an area where this difference is observable. We urge all renters to consider sharing a mortgage as a strategy to save themselves money and possibly make money over renting. You can take the first step by joining our community today. Call us on 020 7112 5388 for more information or click on the following picture.


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 Taking Hammersmith & Fulham as a sample borough in London,  we looked at the scenarios for renting or buying a sample one bedroom flat. 

Renting costs £15,500 yearly

We found that presently, an average one bedroom flat in Hammersmith commands £295 per week in rent, according to London Property Watch, whose website is updated daily. This gives a monthly rent of £1,278. We nominally added £295 to this - one week's rent - as representative of an estate agent's fee to give a spend on two years' renting of £30,975.



1. Purchase

We found a sample one bedroom flat in Hammersmith being sold on Rightmove for £279,950. We then assumed that our hypothetical buyer only brought a 5% deposit to the table, some £13,998. We then considered what NatWest, a large mortgage lender, would offer for these parameters.

NatWest offered a two-year fix  - 25 year term - rated as '4.4% APR by comparison', giving sample repayment costs of £1,625.25 monthly. For hypothetical costs of purchase, we added Stamp Duty (£8,398), Land Registry (£270) and Solicitor's fees (£600), which totalled £9,268.


2. Sale

We allowed £2,040 (£1,700 + VAT) to cover the selling estate agent's fees. Once again, we apportioned £600 for solicitor's fees. After two years, mortgage repayments would total £39,006.

The total cost of buying at the end of year two, when the fixed rate finishes and early mortgage repayment charges are no longer applicable, would therefore be £64,912 (including the initial deposit).

According to the Land Registry, one bedroom flats in Hammersmith & Fulham increased in value by 32.48% in the last two years. This means that our sample property, if the next two years were like the last two years, would be worth £370,877.76, or a gain in value of £90,927.76. This is, of course, a projection and worthy of a caveat: property prices can, of course, fall as well as rise.


Owning your own property can earn you £2.3k per month over renting

Subtracting all costs, the net gain after selling under these conditions of rising house prices would be £26,015.76.

This equates to a monthly return on investment of £1,083.99.

The money which would have been lost in renting, £30,975, must be added to this figure to calculate the full benefit of buying over renting. This gives a total gain of £56,990.76 for the two years or £28,495.38 per year. 

This equates to £2,374.62 per month; for most people, this is a decent wage.


Sharing a mortgage lowers the barrier to entry further

Some may even consider that the £13,998 deposit sum involved is a considerable barrier to entry. If we assumed that two people moved into the one bedroom flat as a couple, this sum would reduce to just under £7,000 each.

Put another way, £7,000 would be the figure required - assuming a person fulfils the requirements for being granted a mortgage from a lender - in order, firstly to gain a foothold on the housing ladder and secondly to make a capital gain. Naturally, the gain would be divided between two people but the alternative would be for each person to waste £30,975 in renting for two years.


The more the merrier

Alternatively, if both people brought £13,998 to the table, then the choice of property they could afford to buy would increase and the repayment interest rate would decrease. Further, they could consider buying a property with more bedrooms, then share all the mortgage costs between three or four people, making the proposition increasingly more attractive.

We urge people currently renting to examine for themselves how this kind of scenario could work for them. The money paid over in rent will always be dead money.

Share a Mortgage can help people in their aspirations to buy a property. Call us now on 020 7112 5388 to discuss your taking first step onto the property ladder and how to escape the shackles of renting, even in London


Land Registry

London Property Watch


NatWest mortgages


Read other related articles:

1. Share a mortgage with working professionals

2. Share a mortgage with families

3. Share a mortgage with friends

4. Share a mortgage with low incomes

5. Share a mortgage with different shares of deposit

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Updated Marcus Simpson 14 October 2014