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Majority of young homeowners paying off mortgage faster than planned

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The majority of young homeowners are making overpayments on their mortgages, according to new research from Which? Mortgage Advisers.

Almost half (46%) of homeowners overpaid on their mortgage, with 18-24 years olds leading the pack with as many as seven in 10 (69%) paying off more of their loan than previously arranged.

Which? Mortgage Advisers found that of all those surveyed, people in London (60%) and the West Midlands (52%) were the most likely to be making overpayments on their mortgages, while Scotland had the lowest level of overpayments at 38%.

Paying down a mortgage early is so popular with some homeowners that a quarter (25%) are paying extra towards their mortgage on a monthly basis, with an average overpayment from June 2017 to June 2018 of 14.3%.

In September, Which? revealed that numerous banks were failing to pass base rate rises on to customers with savings accounts. Poor interest rates from savings accounts could be one factor driving the high levels of mortgage overpayments.

David Blake, Principal Mortgage Adviser, Which? Mortgage Advisers, said:

“While it might be surprising to hear that so many people have paid off extra chunks of their mortgage recently, the benefits can be massive, cutting months off the total length of your loan – and, in turn, saving you hundreds or even thousands in interest.

“If you haven’t done so recently, you may want to look at your remortgaging options to ensure you’re paying the best possible rate and have the flexibility to overpay when possible.”

For advice on your mortgage options, visit mortgageadvisers.which.co.uk

Mortgage overpayment tips:

  • Some mortgage lenders limit the amount you can overpay to 10% per year.
  • You can either make regular overpayments or do it in lump sums.
  • Before making an overpayment consider what else you might need the money for (e.g. home improvements).
  • Consider remortgaging to a cheaper deal so that you can afford to pay off your mortgage even faster.

Full tables of results

By age:

Age group (years) Percentage that have made an overpayment on their mortgage in the year to June 2018
18-24 69%
25-34 52%
35-44 45%
45-50 38%
51-59 42%
60-69 37%
70+ 25%

By location:

Location Percentage that have made an overpayment on their mortgage in the year to June 2018
South West 44%
South East 48%
East of England 40%
West Midlands 52%
East Midlands 43%
Yorkshire and the Humber 43%
North West 41%
North East 41%
London 60%
Scotland 38%
Wales 46%
Northern Ireland 48%

 

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