April 13 is 'mortgage freedom day'

Homeowners have typically earned enough cash by April 13 to cover their mortgage payments for the whole of 2013, a report has found.

But people living in the rental sector will have to wait another month on average - until May 12 - before they find themselves in the same position, Halifax found.
Halifax pinpointed April 13 as "mortgage freedom day", after working out that on the 103rd day of the year, people will have earned enough from their average annual take-home pay of £23,450 to cover their yearly mortgage repayment costs.

The calculation is based on yearly mortgage repayments costing £6,597 typically for a new borrower, including capital and interest payments. The figure is also based on typical house prices of around £161,400, as well as someone having a 30% deposit or equity in their home.

Every penny of someone's income for the year so far would have to be channelled just towards mortgage payments in order for them to have mortgage freedom for the rest of 2013.

Meanwhile, someone living in the rental sector will have to earn another month's pay until they have covered the average yearly rental payment of £8,892.

Due to house price and wage variations across the UK, there were huge differences in the dates when people up and down the country could theoretically have earned enough to cover their yearly mortgage payments.

Mortgage freedom day in Northern Ireland was on March 16, whereas in Scotland it was on March 21 and in Wales it was last Tuesday (April 9). Homeowners in England will have to wait until Tuesday this week (April 16) until they have earned enough cash this year to cover their annual mortgage costs.

Craig McKinlay, mortgage director of Halifax, said: "For most homeowners, 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."

© 2013 Press Association
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