It's cheaper to buy than to rent!

In most of Britain, it may actually work out cheaper to buy your home than to rent it.

Should you carry on renting, or is now the time to take the plunge?

When working out the answer to this question, it's not just your own finances and whether you can afford to take on a mortgage that you should consider. The location of the property also plays a big part.

Zoopla.co.uk, a property information website, has put together a brand new index aimed at discovering where in the UK it is better to rent rather than buy, and vice versa. The index compares current asking prices to average rents for two bedroom flats in the top 50 locations across the UK.

Interestingly, according to Zoopla, buying a property actually works out to be cheaper in 74% of locations. That's three-quarters of the country where it makes more financial sense to purchase your home, rather than rely on the rental sector, a figure that strikes me as a touch high in all honesty.

Where renting comes out top

First though, let's take a look at Zoopla's findings, starting with the 10 locations where it makes the most sense to rent, rather than buy.

Topping the list of places where it makes more sense to rent than to buy is Huddersfield, where rent stands at a pretty cheap-looking £493 a month. Considering the average rent across the North West region currently stands at £563.42 a month, according to rental experts Paragon, Huddersfield certainly does look decent value.

But the one result here that really caught my eye is Brighton, which commands a whopping average monthly rent in excess of £1,000, a good £300 more than any of the other members of the top 10. However, it still makes sense to rent in Brighton due to the mammoth house prices, no doubt influenced by the fact that not only does the town offer life by the sea, but it's also an easy commute into London.

Where buying is cheaper

What about the other end of the scale? Where does it work out to be more economically sensible to purchase your home, according to Zoopla?

So Dundee takes top spot, with property available at just £88,263. When you consider that according to Zoopla's own Zed Index, the current average value of property across the UK is £220,533, it's clear that Dundee represents some serious value.

Indeed, other than Cambridge, all of the towns in the top 10 boast property priced well below the national average.

An issue with the methodology

So, taking the research on face value, for the majority of us we should be rushing off to buy our homes, turning our backs on the private rented sector.

Inevitably, it's not quite as simple as that, as I have to take issue with the methodology Zoopla has used for this calculation. When calculating mortgage costs, Zoopla has based it on an interest-only mortgage at 5%, which is not really the mortgage model most buyers in the UK adopt.

As a result, interesting as these results are, you will need to factor in that if you're paying off your mortgage on a capital repayment basis, the mortgage costs will likely be substantially higher than those quoted by Zoopla.

Time to act

It's worth noting that Zoopla acknowledges its perceived balance of power in favour of buying may not last that long. It reckons that just a 1% increase in Bank Base Rate would lead to renting becoming more financially sensible in a whopping 80% of locations across the UK.

Of course, all the signs are that Bank Base Rate will stay where it is for some time yet – indeed, even Mervyn King, the Governor of the Bank of England, this week said it will be some time yet before interest rates return to more 'normal' levels. However, if the credit crunch has taught us anything it's that when it comes to the economy, things can change very quickly.

So if you are planning to get on the property ladder, these are some of the brilliant mortgages you should be considering.

15 fabulous first-time buyer mortgages

More: 19 top 90% mortgages! | Big cities should expect house price falls

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term will revert to the lender's standard variable rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.