It is now cheaper to make monthly mortgage payments than pay rent in every region of Great Britain – even where homeowners have very large loans.
The average monthly rent in the UK is now £995 per household, compared to an average monthly mortgage repayment of £805 for first-time buyer households.
The latter figure is based on the average first-time borrower's deposit of 21pc – meaning they have a mortgage of 79pc of the property's price.
Over the course of a year, the average total savings for mortgaged homeowners add up to £2,300 per household.
The calculations simply compare mortgage repayments with rent and don't take into account other costs of home ownership such as repairs and upkeep.
The South West of England faces the biggest rental "premium", with the average mortgage repayment is a hefty £192 per month cheaper than the cost of renting.
The divide is high in London, too, with tenants forking out £179 extra monthly for a rental property.
The East of England is the region where rental and mortgage prices are most similar, with the average mortgage repayment a mere £2 cheaper.
The research, by mortgage lender Santander, found the average first-time buyer house price to be £212,610.
A buyer with the average 21pc deposit would require a £44,648 deposit in order to make the switch from tenant to homeowner.
• For money tips, tricks and ideas, get our weekly round-up here
However, by using a Help to Buy equity loan or mortgage guarantee, that could drop to as little as 5pc, or £10,630 – just over £5,300 each if split between a couple.
Miguel Sard, managing director of mortgages at Santander UK, said: “People assume that buying a property will put them under greater financial pressure, but often the reverse is true.
“With annual savings [of buying versus renting] averaging well over £2,000, this can really mount up over time and once the mortgage is repaid you have a valuable asset to show for it.”
Use our calculator below to work out when you will be able to afford a house, and what you’ll need to save to get there if you aren’t on track already.
- House price today: Pick your desired location for an average house price, or you can enter any value you please up to £999,999.
- Desired deposit: What percentage of the house price you want or need to save – remember this can be as little as 5pc with Help to Buy.
- Annual savings: The average you think you can save per year – if you're not saving much but will be, then put an overall expected average.
- Total start amount: How much money you have already got saved.
- Total assistance available: How much you will be given towards a house by family or other sources. Don't include Help to Buy here; to factor that in, drop the deposit amount instead.
- Annual house price inflation: How much house prices will go up per year. The Office for Budget Responsibility average for the next five years is around 5pc, which is the default here, but change it as you please.
- Attitude to risk: This is how willing you are to take risk with your money through investing. The low figure would be if you were sticking to Isas and savings accounts with little to no investment. Medium would involve investing in some stocks, funds or other risk taking options, but steering clear of anything too risky. High would involve taking a significant amount of risk with your money, but with greater potential returns.
Have a question for our experts? Email firstname.lastname@example.org