Today is Mortgage Freedom Day – when the average new UK home-owner will have earned enough to pay off the cost of their mortgage.
The 103rd day of the year is calculated by Halifax on the basis that all their earnings from 1 January are devoted to mortgage payments until the annual payments have been paid in full. The calculation includes both first-time buyers and home-movers.
But on average, renters spend an extra four weeks paying off the cost of their home – highlighting the high cost of renting compared with paying off a mortgage. Interest rates have been at a low of 0.5 per cent for three years.
However, different areas of the country have earlier Mortgage Freedom Days than others – with seven of the earliest ten taking place in Scotland.
Typical new home-owners in West Dunbartonshire earn enough to pay off their mortgage on 6 March – the second earliest in the country, followed by Renfrewshire, North Ayrshire and South Ayrshire on 7 March. The average mortgage freedom day for Scotland is 21 March – beaten nationally only by Northern Ireland, where it occurs five days earlier.
Nationally, there is only a few days difference between earliest and latest dates, as England’s is the last to take place on 16 April.
Craig McKinlay, mortgage director for Halifax, said: “For most home-owners, mortgage payments are the biggest outgoing every month; knowing they’ve earned enough to pay off their mortgage for another year should be a reassuring thought.
“These calculations also highlight the significant difference between buying and renting. If you rent your home, then every year, on average, you will need to do about a month’s extra work to cover the cost of renting compared to a mortgage.”