Buying a home with a low deposit could be cheaper than renting in many major UK cities, according to research from Lloyds (LLOY.L).

The bank’s analysis, published Friday, compared average monthly rental costs with typical first-time mortgage payments in 11 cities across the UK. In nine of these cities, it found owning a home could work out cheaper than renting on a monthly basis. Lloyds (LLOY.L) said that it excluded London from the analysis due to higher property prices and different affordability dynamics.

The research focused on affordability with a 5% deposit, using the average first-time buyer house price across each city, with calculations for mortgage costs based on a five-year fixed interest rate of 4.78% over a 30-year repayment term. Average rent figures and the price that first-time buyers typically paid for a property were taken from data published by the Office for National Statistics (ONS) in September.

The lender highlighted that these scenarios were illustrative examples of only the monthly mortgage repayment amount and said that the research did not include additional costs, such as legal fees or any other ongoing costs associated with homeownership.

Lloyds (LLOY.L) found that the average 5% deposit would be £11,412 based on a typical first-time buyer property price of £228,233 across Great Britain.

According to the bank’s calculations, first-time buyers could save the most in Glasgow, finding that mortgage payments could be around 32% cheaper than rent. Lloyds (LLOY.L) said that this could mean buyers save £396 a month, or £4,752 a year. In Glasgow, the research showed that the average first-time buyer property cost £172,000, meaning a 5% deposit would be £8,600.

The research found that Newcastle potentially offered the second biggest difference between the monthly cost of renting and buying. Lloyds (LLOY.L) said that a difference of 19.5% could mean first-time buyers save £217 per month or £2,604 a year. On average, first-time buyers in the city paid £180,000 for a property, making a 5% deposit £9,000.

In Edinburgh, the analysis showed that mortgage repayments could potentially be 13.2% cheaper than renting – working out to a monthly saving of £184 and an annual saving of £2,208. On average, first-time buyers paid £243,000 for a property in Edinburgh, so a 5% deposit would be £12,150.

While the research showed that renting could work out slightly cheaper in the short-term in Cardiff and Sheffield, Lloyds said the that longer-term benefit of building up equity in the property could outweigh the difference.

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Amanda Bryden, head of mortgages at Lloyds (LLOY.L), 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.”

For this reason, she said that “low-deposit mortgages could be right for many,” but also said it was important to consider other upfront costs such as legal fees and moving expenses.

“For anyone thinking about buying, speaking to a mortgage adviser or broker is a great first step,” said Bryden. “They can help you understand what’s affordable based on your budget and guide you through all the options.”

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