Top of the list is Hull, where the average two-bedroom house costs £90,000. With annual mortgage costs at £3,096 and the average income for the year from taking in a lodger standing at £4,160, not only can homeowners live mortgage free but they can also make an average annual profit of £1,064. Better still the income from renting out a spare room is tax free up to £4,250 through the government’s Rent A Room scheme.
In second spot is the Lancashire seaside town of Blackpool, where the owner of an average two-bedroom house, worth £105,000, would net £4,472 by taking in a lodger paying £86 per week. With mortgage payments over a year totaling £3,612, homeowners could enjoy mortgage free living and still have enough profit left over every year to put towards other household bills.
SpareRoom.co.uk compiled the Live Mortgage Free List by looking at the average cost of a two-bedroom house in towns and cities across the UK and calculating what the annual mortgage payments would be if a homeowner had a two-year fixed rate mortgage, at an 80% loan to value. According to comparison website Moneyfacts, the average two-year fixed rate mortgage currently stands at 4.30% on an 80% LTV.
Of the major cities in the UK, Manchester appears in fourth place in the list, with homeowners potentially enjoying mortgage-free living with the extra fillip of an £807 average annual profit on top. Belfast and Liverpool sit at fifth and tenth place respectively in the list.
London does not appear in the list, with the high price of housing in the capital making the idea of mortgage-free living a distant dream. With the average two-bedroom house in London at £350,000, annual mortgage costs are £12,040 compared to average total rent from a lodger of £8,268.
Breaking the Live Mortgage Free List down by region, half the towns and cities are in the north of England and almost a third are in the Midlands, while it is noticeable that there are no towns or cities from the south.
Matt Hutchinson, director of SpareRoom.co.uk, said:
“The dream for many homeowners is to pay off their mortgages as early as possible, but, in reality, owning outright is unlikely to be possible for many years. By taking in a lodger, homeowners in some UK towns and cities can enjoy the benefits of effectively living mortgage free, long before their mortgage is actually paid off.
“Taking in a lodger has become an increasingly popular way for homeowners to generate some extra income especially because they can earn up to £4,250 tax-free from renting out their spare rooms. And with mortgage rates creeping up, despite the Bank of England base rate remaining at 0.5%, the simplicity of renting out a spare room is only likely to become more attractive.
"Of course, for many people taking in a lodger won’t necessarily cover their mortgage, but it still remains one of the easiest and most effective ways for homeowners to generate a sizeable additional income.”
