As many as 67% of first-time buyer are making overpayments on their mortgage with many hoping to become mortgage free by the age of 40.
This is according to new analysis by mortgage lender, TSB, which found more first-time buyers are focussing on becoming mortgage free than saving for their pension.
It would appear paying off the mortgage is a financial priority for 68% of those making their first step on the property ladder compared to 25% who want to boost their pension pot.
Censuswide surveyed just over 1,000 first-time buyers who had purchased a home in the past five years – and found almost three-fifths (57%) hope to shave time off their mortgage term.
Of those that have made overpayments, over two-fifths (43%) make them monthly. The most common overpayment was between £200 to £299 each time, and then £300 to £399.
But TSB found that 9% made lump sum payments between £1,000 to £2,499 to get ahead on their mortgage.
Other methods being used by first-time buyers to shorten the term of their mortgage included saving more, budgeting more strictly, taking a second job or forgoing holidays and lifestyle spend. Some had even decided to reduce pension contributions.
For the third (33%) of first-time buyers not making overpayments, the main barrier was affordability, followed by preferring to keep a safety buffer, saving for a family, job security concerns and prioritising the now, with holidays and lifestyle spend.
Craig Calder, director of mortgages at TSB, said: “Recent first-time buyers are prioritising overpayments over building up savings, pension contributions and holidays, in the hope of becoming mortgage free earlier in life.
“Overpaying can be a great way of shaving years off your mortgage, and we’d advise building this into your wider financial plan that ensures money confidence across savings, budgeting and a pension.”
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
