The cities where buying beats renting – with just a 5% deposit
- British first-time buyer mortgage payments are typically 17% cheaper than renting, even with a low 5% deposit
- The average 5% deposit is £11,412 based on a typical first-time buyer property price of £228,233
- 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
- Those stepping on the ladder in Bristol can build up almost £25,000 in additional equity over just five years
Getting on the property ladder might be closer than many first-time buyers think. New research from Lloyds reveals that, in most major UK cities outside London, buying a home with a low-deposit mortgage is cheaper than renting – potentially saving buyers thousands each year.
The analysis compares average monthly rental costs with typical first-time buyer mortgage payments in 11 cities across the country. In nine of those cities, owning a home works out cheaper than renting on a monthly basis.
With 67% of first-time buyers saying that saving for a deposit is the biggest hurdle to owning a home1, the research focuses on affordability with a 5% deposit, based on average first-time buyer property prices in each city. Calculations use a 4.78% interest rate fixed for five years, with a 30-year repayment term.
Encouragingly, a recent Lloyds survey found that 45% of prospective first-time buyers who’ve started saving already have £10,000 or more set aside2 – putting them well on the way to a 5% deposit in many cities.
While buying is often cheaper than renting, it’s not the right choice for everyone. Flexibility, job mobility, and lifestyle preferences mean renting still suits many. But for those ready to settle, the financial case for buying is increasingly compelling.
Where can first-time buyers save?
- Glasgow leads the way, with mortgage payments around 32% cheaper than rent – saving buyers £396 a month, or £4,752 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 ranks second for savings, with first-time buyers paying 20% less on average for a mortgage than they would in rent. That’s 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.
- Nottingham is a little further down the list, while still offering savings 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.
| City | Average first-time buyer price | 5% deposit amount | Monthly mortgage cost | Monthly rent cost | Mortgage vs rent saving | Monthly saving | Annual saving |
| Glasgow | £172,000 | £8,600 | £855 | £1,251 | 31.7% | £396 | £4,752 |
| Newcastle | £180,000 | £9,000 | £895 | £1,112 | 19.5% | £217 | £2,604 |
| Edinburgh | £243,000 | £12,150 | £1,208 | £1,392 | 13.2% | £184 | £2,208 |
| Bristol | £311,000 | £15,550 | £1,547 | £1,778 | 13.0% | £231 | £2,772 |
| Manchester | £234,000 | £11,700 | £1,164 | £1,317 | 11.6% | £153 | £1,836 |
| Nottingham | £183,000 | £9,150 | £910 | £996 | 8.6% | £86 | £1,032 |
| Leeds | £209,000 | £10,450 | £1,039 | £1,098 | 5.4% | £59 | £708 |
| Liverpool | £167,000 | £8,350 | £830 | £864 | 3.9% | £34 | £408 |
| Birmingham | £208,000 | £10,400 | £1,034 | £1,068 | 3.2% | £34 | £408 |
| Cardiff | £231,000 | £11,550 | £1,149 | £1,138 | -1.0% | -£11 | -£132 |
| Sheffield | £190,000 | £9,500 | £945 | £893 | -5.8% | -£52 | -£624 |
| GB average | £228,233 | £11,412 | £1,135 | £1,360 | 16.5% | £225 | £2,700 |
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 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.”
Why buying builds long-term security
Beyond the monthly savings, buying a home offers more security, and helps build financial stability.
Over five years, a buyer with a 5% deposit could reduce their loan-to-value ratio from 95% to 87% – even if property prices stay flat.
This means more equity in the home, lower risk of negative equity (a concern often associated with low-deposit mortgages), and better access to future mortgage deals.
Combined with the savings from cheaper mortgage payments compared to renting, this could make a first-time buyer around £32,000 better off after five years – or around £20,500 taking into account the cost of the initial deposit.
Glasgow also tops the city charts on this measure, with monthly savings building up to £23,760 over five years, and additional equity of £13,818, totalling £37,578 or £28,978 on a net basis when the original deposit amount is deducted.
Next comes Bristol, where the monthly savings over give years total £13,860 and additional equity grows to £24,985 to total £38,845, and £23,295 on a net basis.
Even in cities such as Cardiff and Sheffield, where renting can work out slightly cheaper in the short-term, the longer-term benefit of building up equity in the property usually outweighs the difference.
| City | Average first-time buyer price | 5% deposit amount | Added equity after 5 years | 5-year savings (mortgage vs rent) | Added equity plus savings | Net ‘Better off’ (added equity plus savings, minus deposit) |
| Glasgow | £172,000 | £8,600 | £13,818 | £23,760 | £37,578 | £28,978 |
| Bristol | £311,000 | £15,550 | £24,985 | £13,860 | £38,845 | £23,295 |
| Newcastle | £180,000 | £9,000 | £14,461 | £13,020 | £27,481 | £18,481 |
| Edinburgh | £243,000 | £12,150 | £19,522 | £11,040 | £30,562 | £18,412 |
| Manchester | £234,000 | £11,700 | £18,799 | £9,180 | £27,979 | £16,279 |
| Nottingham | £183,000 | £9,150 | £14,702 | £5,160 | £19,862 | £10,712 |
| Leeds | £209,000 | £10,450 | £16,791 | £3,540 | £20,331 | £9,881 |
| Birmingham | £208,000 | £10,400 | £16,710 | £2,040 | £18,750 | £8,350 |
| Liverpool | £167,000 | £8,350 | £13,416 | £2,040 | £15,456 | £7,106 |
| Cardiff | £231,000 | £11,550 | £18,558 | -£660 | £17,898 | £6,348 |
| Sheffield | £190,000 | £9,500 | £15,264 | -£3,120 | £12,144 | £2,644 |
| GB average | £228,233 | £11,412 | £18,336 | £13,500 | £31,836 | £20,425 |
Amanda continues:
“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.
“For anyone thinking about buying, speaking to a mortgage adviser or broker is a great first step. They can help you understand what’s affordable based on your budget and guide you through all the options.”
Where to start?
- Speak to an expert
Before you dive in, talk to a mortgage adviser or broker to get a clear picture of what’s affordable for you. They’ll walk you through everything from deposits to legal fees, and help you understand your options. With Lloyds, you can book a video appointment at a time that suits you.
- Make your savings work harder
Set up a direct debit into a dedicated savings account to build your deposit steadily. And don’t forget to check out government schemes like the Lifetime ISA – it gives you a 25% bonus on your savings (up to £1,000 a year), helping you reach your goal faster.
- Explore low-deposit options
You don’t always need a huge deposit to get started. Many lenders, including Lloyds, offer mortgages with just a 5% deposit – making home ownership more achievable. Use a mortgage calculator to see how much you could borrow and what your monthly payments might look like.
You May Also Enjoy
Budget Commentary – Mansion Tax, Business Rates & Planning Reform
Budget 2025 market data & home-mover and agent insight
Breaking Property News 24/11/25
What does Rachel Reeves have in store for the UK property market?
Why Property Guarantors Need Legal Advice Before Signing