UK regions where it’s cheaper to buy a home with a 10% deposit than rent

THE price of buying a home for the first time is cheaper than renting in several UK regions, according research.

Online broker Trussle looked at the best 90% loan-to-value (LTV) mortgages offers on the market, where buyers only need to supply a 10% deposit.

The five regions where you may be able to save money if you buy rather than rent

They found that average monthly mortgage repayments work out to be cheaper than the average monthly rent in five UK regions.

It comes as rents hit record highs while the reintroduciton of LTV mortages have made it cheaper for first-time buyers to purchase a home.

If you can afford to put down a bigger deposit – for example 20% or 30% – then it becomes cheaper to pay monthly deposits than rent in more areas of the UK.

But with a smaller 10% deposit, first-time buyers can make the most savings by purchasing rather than renting a property in a handful of regions.

Those with a 10% deposit can save the most in Northern Ireland, where the average monthly mortgage payment was found to be £681 compared to £511 for monthly rent – a staggering £170 (25%) saving.

This was followed by Yorkshire and Humberside, where you can save £50 (7%) if you buy a house and the West Midlands where you can save £40 (5%).

Homebuyers can also save £3 a month in the East Midlands and £2 a month if they buy in the North West.

What help is out there for first-time buyers?

GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.

Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.

Help to Buy equity loan – The Government will lend you up to 20% of the home’s value – or 40% in London – after you’ve put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.

Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.

Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you’re restricted to specific ones.

Mortgage guarantee scheme – The scheme opens to new 95% mortgages from April 19 2021. Applicants can buy their first home with a 5% deposit, it’s eligible for homes up to £600,000.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “This is great news for first-time buyers who typically have lower deposits, as these high LTV deals provide an accessible route onto the housing ladder and can often result in more affordable monthly payments than renting.

“However, we’d advise all buyers to speak to a mortgage broker to ensure they are getting the most suitable deal for their personal circumstances.”

It’s important to note that Trussle’s figures are the average rent and mortgage payments for the area and will not represent everyone’s situation.

Homebuyers, who get different mortgage offers depending on their credit history, salary and deposit, may have above average monthly payments, which work out to be more than the option of renting.

The findings come as average UK monthly rents hit a record high of £992, according to the Homelet Rental Index.

The launch of the Government’s loan guarantee scheme has also made it cheaper for first-time buyers to purchase a property with the option to apply for a 95% loan.

Wannabe homeowners can also get a discount of up to 50% off a new-build home with the Government’s First Home scheme.

The discounted homes will be sold to local people who want to stay in the community where they live or work, but are struggling to buy a home at market prices.

The schemes come as part of the Government’s wider affordable housing plan announced in June last year.

But the surge in cheaper mortgages, as well as the stamp duty relief extension, have been driving factors in the rise of house prices during the pandemic.

In April, house prices jumped almost £7,000 in a month to an all-time high of £327,797, according to Rightmove.

The surge has also been driven by a shortage of houses on the market, as more families search for homes out of cities due to the shift of working from home.

Plus, there is growing optimism with buyers due to the vaccine roll-out.