Getting onto the property ladder can be complicated, expensive and stressful but is it harder if you’re flying solo?
In the new Mortgage Affordability Report from money.co.uk, the mortgage experts have analysed data from the world’s 20 wealthiest countries to reveal most and least affordable countries for mortgage repayments if you’re buying alone.
Here in the UK, owning a home is one of the top priorities for young people. In fact, according to a recent survey by Santander, younger people place more importance on owning their own place, than financial security, getting fit or even starting a family.
If you are looking to purchase your first home or looking for the best rate on a sole name mortgage, you should compare mortgages to understand how much you can afford to borrow.
The money.co.uk mortgage experts looked at 20 countries to determine the most affordable place for potential homeowners, based on factors such as estimated mortgage costs, living costs as well as the average monthly income in each country, amongst others.
The Mortgage Affordability Report takes the following seven factors into account:
Mortgage interest rates
Average median house price
Estimated monthly earnings (individual)
Monthly cost of living (single person without rent)
20% mortgage deposit
Mortgage and living expenses as a % of Earnings
Each country can score a maximum of 20 points for each category, giving us a maximum Mortgage Affordability score of 140.
Dreaming of getting on the property ladder and moving into your dream home? Our report determines which of the 20 countries in the report are the most affordable, by calculating the average house price in each country against mortgage interest rates, average salary, cost of living, and mortgage deposit amounts to determine how much you’ll be paying back each month for your mortgage.
Of the 20 countries in the report, the US was found to be one of the most affordable scoring 130 out of 140:
Average property price: £119,000
Average monthly income: £3,994
Average monthly mortgage payment: £580.41
Mortgage repayments account for just 14.5% of income for the average homeowner in the US, making America one of the most affordable countries to own a home.
Taking second place is Belgium, scoring 122 out of 140 points; making it Europe's most affordable country for homeowners:
Average property price: £152,000
Average monthly income: £2,911.88
Average monthly mortgage payment: £600.29
The average first time buyer in Belgium is 27, and a repayment mortgage on a £152,000 property, with a 20% deposit, the average Belgian can expect to budget £600.29 a month on mortgage repayments.
In third place is Spain, scoring 114 out of 140 points:
Average property price: £142,000
Average monthly income: £1,843.50
Average monthly mortgage payment: £592.00
For a repayment mortgage on a £142,000 property, with a 20% deposit, a solo house-hunter in Spain can expect to budget £592.00 a month for mortgage payments. From this we can estimate that home buyers will spend 32.56% of their income on household bills.
Our report also considers how much of their monthly income would be spent on mortgage payments, with some eye watering results.
Japan, the third largest economy in the world, is the least affordable country for a solo homebuyer scoring just 37 out of 140 on the affordability scale.
Average property price: £391,000
Average monthly income: £2,530.16
Average monthly mortgage payment: £1,499.35
For a repayment mortgage on a £391,000 property, with a 20% deposit, a solo house-hunter in Japan can expect to budget a whopping £1,499.35 a month for mortgage payments. This means that more than half of home buyers' salaries will be spent on mortgage and living expenses.
Next up are France and the UK, scoring 50 and 55 out of 140.
France takes second place for the least affordable country for home ownership with the average property costing £255,200 with the 20% deposit amount excluded (£63,800).
Average property price: £319,000
Average monthly income: £2,687.59
Average monthly mortgage payment: £1,234.00
French home buyers will pay £1,234.98 a month on mortgage repayments, based on the average salary (£2,687.59) and cost of living (£705.31).
Taking the third position for the least mortgage friendly country is the UK.
Average property price: £254,000
Average monthly income: £2,560.73
Average monthly mortgage payment: £1,142.00
Mortgage repayments account for a staggering 44.60% of income for the average homeowner in the UK, making the country one of the least affordable places to own a home.
Out of the 20 countries in the report, these are the 10 most affordable places to purchase a property, based on mortgage interest rates and average house prices.
The top three countries for mortgage affordability are the US, Belgium and Spain, in fourth place is beautiful and scenic Italy.
Italy takes fourth place in our report with a mortgage affordability score of 116 out of 168 points. Residents looking to get onto the property ladder can expect to pay £167,000 on average. Deducting the 20% deposit amount of £33,400, Italy’s home buyers can expect to mortgage their homes for £133,600.
Calculating this against the average salary (£2,094.88) and monthly cost of living (£649.42) in the country, our report estimates that 31.93% of their salary will be spent on monthly mortgage and living expenses.
Looking at average mortgage interest rates around the world, we analysed how much more you might pay to own your home in the wealthiest countries.
Our report reveals that Switzerland, France, and the Netherlands are the most expensive countries to own a home, with interest rates adding a significant amount of money to total mortgage repayments.
Of the 20 countries in the report, Switzerland is the most expensive country to own a home when analysing the average house price against average interest rates in the country.
Mortgage interest rate: 1.44%
Mortgage Term: 20 years
Average house price: £501,000
House price minus 20% deposit: £400,800
Interest amount: £60,720
Total house price: £561,720
France takes second place for the most expensive country to own a home with interest rates adding an extra £41,680 to the average house price with the deposit amount excluded.
Mortgage interest rate: 1.55%
Mortgage Term: 20 years
Average house price: £319,000
House price minus 20% deposit: £255,200
Interest amount: £41,680
Total house price: £360,680
Despite having an interest rate of 5.77%, Romania still takes the lead for the most affordable country to own your home outright.
Mortgage interest rate: 5.77%
Mortgage Term: 20 years
Average house price: £69,000
House price minus 20% deposit: £55,200
Interest amount: £37,920
Total house price: £106,920
Properties are significantly less expensive in Romania (£69,000); even with the added interest rate of £37,920 included over the average 20 year mortgage term, home buyers will still only be paying £106,920 in total.
Commenting on the results of the Mortgage Affordability Report, money.co.uk’s personal finance expert, Salman Haqqi explains why negotiating the best mortgage deal to suit your financial situation is important:
Not many people have the cash available to buy a property outright, so most home buyers will need to borrow the money using a mortgage. And every mortgage borrower dreams of the day they no longer have to pay the monthly repayments and spend their money how they wish.
Mortgage terms can vary and choosing the right one for your circumstances is important because defaulting on mortgage payments has far-reaching consequences and can put your home at risk.
Mortgages repaid over a longer term cost less per month, which makes them an attractive option for first time buyers, but you’ll pay more overall due to the accrued interest. Coupled with a low-deposit or ‘95% mortgage’, this can end up being an expensive way to own your home.
Meanwhile, mortgages with a shorter term will make the monthly repayments higher, but you’ll pay the balance off more quickly, meaning you’ll own your home outright sooner and pay less in interest.
Here in the UK, one in six homeowners deferred their mortgage payments to alleviate some of the pressures because of the financial impact of the pandemic.
As these ‘mortgage holidays’ come to an end, lenders will be asking homeowners to increase their monthly payments, or extend their mortgage term, which means many will be paying their mortgage off for longer than expected.
If you are worried about affordability, it’s vital that you speak to your lender as there are many schemes in place to help ensure you avoid financial difficulty and the stress that goes along with that.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.
Taking a seed list of 20 wealthiest GDP countries, we discovered the most and least affordable countries for solo homeowners by scoring each country on the following seven factors:
Mortgage interest rates /20
Average median house price /20
Estimated monthly earnings /20
Monthly cost of living (single person without rent) /20
20% deposit amount /20
Mortgage payments /20
Mortgage & living expenses as a % of earnings /20
Mortgage interest rates
Calculated using Numbeo’s rankings by country of mortgage interest rate in percentages (%), yearly, for 20 Years Fixed-Rate. https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=106
Average median house price
Calculated based on the average median house prices from money.co.uk’s “Age of the first time buyer” report - https://www.money.co.uk/guides/first-time-buyers-around-the-world
Estimated Monthly Earnings
Calculated based on World Data’s average income calculator https://www.worlddata.info/average-income.php
Monthly Cost of Living (Single Person without rent)
The cost of living figures were calculated using Numbeo based on a single person with rent payments excluded in each country in the report.
20% deposit amount
We've used a 20% deposit in the report as this is the average amount put down across the world, taking into account differences in financial circumstances. We calculated the deposit amount by taking the average median house price and calculating 20% of this figure.
Calculated based on the average property price in each country, and a deposit of 20%, using Bankrate’s Mortgage Calculator (assuming a 20-year repayment mortgage with average interest rates for each country). https://www.bankrate.com/uk/mortgages/mortgage-repayment-calculator/
Mortgage & Living Expenses as a percentage of earnings
Calculated using the monthly earnings figures and monthly mortgage payments in each country.
All calculations are based on what a single person earns and are based on a 20 year repayment mortgage with deposit and interest.
Each country can score a maximum of 20 points for each of the following categories, giving us a mortgage friendly score of 140.
Please note: the estimates included in this campaign do not account for homeowners moving, remortgaging to release equity in their homes, and is based on information available to us from the following sources:
https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=106 | https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?most_recent_value_desc=true&view=chart | https://www.bankrate.com/uk/mortgages/mortgage-repayment-calculator/ | https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=106 | https://www.money.co.uk/guides/first-time-buyers-around-the-world
Countries included in the report: United States, Belgium, Spain, Italy, Romania, Ireland, Denmark, Czech Republic, Canada, Finland, Austria, Iceland, Germany, New Zealand, Australia, Netherlands, United Kingdom, Switzerland, France, and Japan.
Data correct as of 19/04/21