First-time buyers with just a five per cent deposits could find themselves better off buying than renting in nine major British cities, according to fresh analysis from Lloyds Banking Group.
The bank’s research reveals that Glasgow leads the way, where monthly mortgage payments work out around 32 per cent less expensive than typical rental costs.
That means buyers in Scotland’s largest city could pocket an extra £396 each month, or nearly £5,000 a year, compared to what they would pay in rent.
The study looked at eleven major cities and found that in most of them, getting on the property ladder with a small deposit makes more financial sense than continuing to rent.
Based on typical first-time buyer prices of about £228,000, buyers would need roughly £11,400 for that crucial five per cent deposit.
The calculations assume buyers would secure a five-year fixed rate of 4.78 per cent with a 30-year repayment period.
London was not included in the research because property prices there create completely different affordability challenges.
Newcastle comes in second place for potential savings, where mortgage payments typically cost 20 per cent less than rent. That means £217 back in buyers’ pockets each month, or more than £2,600 annually.
First-time buyers with a five per cent deposit could be better off buying than renting in nine UK cities, Lloyds Bank finds
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In Glasgow, where the average first-time buyer property costs £172,000, a deposit of £8,600 would be needed to get on the ladder.
Newcastle buyers face similar requirements, needing about £9,000 for properties averaging £180,000.
Edinburgh and Bristol also show impressive savings, with mortgage holders paying 13 per cent less than renters in both cities. That equates to monthly savings of £184 and £231 respectively.
Manchester buyers could save £153 monthly with mortgage payments running nearly 12 per cent cheaper than rent, while those in Nottingham might keep an extra £86 each month.
Glasgow leads the way, with mortgages 32 per cent cheaper than rental costs
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Even smaller savings add up. Leeds buyers could save £59 monthly, while Liverpool and Birmingham both offer £34 monthly savings compared to renting.
The research made several key assumptions when crunching the numbers. Buyers would have that five per cent deposit ready, secure a 4.78 per cent interest rate fixed for five years, and spread repayments over 30 years.
Lloyds used official Office for National Statistics figures for both average first-time buyer property prices and typical rental costs in its calculations.
The study focused purely on monthly mortgage payments versus rent. It did not factor in solicitor fees or the ongoing costs that come with owning a property.
The bank explained that London had to be left out because property prices there create such vastly different affordability dynamics compared to other cities.
Cardiff and Sheffield were the only two cities where renting worked out marginally cheaper in the short term. Cardiff renters save £11 monthly while Sheffield tenants keep £52.
But Lloyds suggests that even in these cities, the long-term advantages of building equity could make buying worthwhile.
Amanda Bryden, head of mortgages at Lloyds, said: “Getting together a deposit remains one of the biggest hurdles for first-time buyers.”
She pointed out that with rents having shot up over the past couple of years, many people are already handling monthly payments that exceed what they would pay for a typical mortgage.
The Steel City was one of the only cities where renting worked out marginally cheaper in the short term
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“That’s why low-deposit mortgages could be the right solution for many, helping people move from renting to owning sooner than they thought possible,” she said.
Ms Bryden reminded potential buyers to factor in upfront expenses like legal fees and moving costs, though she said: “For most, the long-term savings will outweigh these.”
She emphasised how building equity in a home rather than losing money to rent creates “a more secure financial future.”
“Speaking to a mortgage adviser or broker is a great first step,” she said.