FTB mortgage payments 17% cheaper than renting: Lloyds Mortgage Finance Gazette

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First-time buyer mortgage payments in the UK 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 first-time buyer mortgage payments in 11 cities across the country.

It found that in nine of those cities, owning a home works out 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 could save more than £4,750 a year.

With an average first-time buyer property price of £172,000 a deposit of just £8,600 could be enough to get on the ladder.

Newcastle ranked second for savings with first-time buyers paying 20% less on average for a mortgage than they would in rent.

This represents a monthly saving of £217, or £2,604 a year. With an average first-time buyer property price of £180,000, a deposit of just £9,000 might be enough to get started.

Elsewhere, a little further down the list in Nottingham savings are still there to be had for first-time buyers.

Owning a first property in the East Midlands city could save buyers £86 a month, or £1,032 each year, compared to renting.

With the average first-time buyer property priced at £183,000, a 5% deposit of £9,150 would be needed.

Lloyds head of mortgages Amanda Bryden 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.”

“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. It’s also important to consider other upfront costs like legal fees and moving expenses – but for most, the long-term savings will outweigh these.”

“There’s no doubt 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, as the impact of growing equity in your own home – money that would otherwise have been lost in rent – means a more secure financial future.”