Mortgage payments for first-time buyers in Britain are typically 17% cheaper than renting, even with a low 5% deposit, the latest research from Lloyds reveals.
Lloyds’ analysis compares average monthly rental costs with typical mortgage payments for first-time buyers in eleven cities across the country.
It turned out that in nine of those cities, owning a house is cheaper than renting on a monthly basis.
The average 5% deposit is £11,412, based on a typical first-time buyer property price of £228,233.
The latest research shows that among major cities outside London, the biggest gap between owning and renting is in Glasgow, where buyers can save more than £4,750 a year.
With the average price for a first-time buyer being $172,000, a down payment of just $8,600 can be enough to get on the ladder.
Newcastle comes in second for savings, with first-time buyers paying on average 20% less for a mortgage than for rent.
This represents a monthly saving of £217, or £2,604 per year. With the average price for a first-time buyer being $180,000, a deposit of as little as $9,000 can be enough to get started.
Elsewhere, further down the list in Nottingham, there are still savings available for first-time buyers.
Owning a first property in the East Midlands city can save buyers £86 per month, or £1,032 per year, compared to renting.
As the average price of a home for a first time buyer is £183,000, a 5% deposit of £9,150 would be required.
Amanda Bryden, head of mortgages at Lloyds, said: “We know that saving for a deposit is one of the biggest hurdles for first-time buyers. With rents having risen sharply over the past two years, many are already managing monthly payments that are higher than an average mortgage.”
“That’s why low down payment mortgages can be the right solution for many, helping people move from renting to buying more quickly than they thought possible. It’s also important to consider other upfront costs such as legal fees and moving costs, but for most the long-term savings will outweigh these.”
“There’s no doubt that it’s a challenging landscape for first-time buyers, with both property prices and interest rates higher than they were just a few years ago. But buying a home remains one of the best long-term financial decisions most people will ever make.”
“It’s not just cheaper than renting in the short term, because the impact of growing equity in your own home – money that would otherwise have been lost on rent – means a more secure financial future.”