Property buyers with a mortgage are on average 17% better off per month than renters, according to new data from Lloyds.

Even with a deposit of 5%, property owners are paying less than tenants in most major cities outside London.

Biggest gap

And the biggest gap between owning and renting is in Glasgow, where buyers could save more than £4,750 a year, followed by Bristol and Newcastle – see table below.

Lloyds compared average rental costs with first-time buyer mortgage payments in 11 cities across the country, and found that in nine owning a home works out cheaper.

The research is based on a 5% deposit, a 4.78% interest rate fixed for five years, and a 30-year repayment term.

Hurdles

Amanda Bryden, Head of Mortgages at Lloyds, says: “We know that saving for a deposit is one of the biggest hurdles for first-time buyers.

“With rents having risen sharply over the last two years, many are already managing monthly payments that are higher than a typical mortgage,” she says.

“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.”

Mary-Lou Press, President of NAEA Propertymark, says: “While low-deposit mortgage products are helping more first-time buyers access the property market, many still face significant upfront financial hurdles.

“Recent changes to Stamp Duty in England and Northern Ireland mean that some first-time buyers will also now have additional tax to pay,” she says.

Fees charged

“Beyond the deposit and any relevant property tax, buyers must also budget for solicitor fees, mortgage arrangement charges, valuation and survey costs, local authority searches, moving expenses, and insurances.

“That said, in some areas, we are seeing that monthly mortgage repayments can still be lower than local rents”.

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