Over two-thirds (67%) of first-time buyers who purchased a home in the past five years have made mortgage overpayments, according to new research from TSB.
The survey of more than 1,000 first-time buyers, conducted by Censuswide, found that almost three-fifths (57%) hope to reduce the length of their mortgage term, while 17% aim to be mortgage free before turning 40.
Among those making overpayments, 43% do so monthly, with one-in-five paying between £200 and £299 each time and one-in-six between £300 and £399.
Just under one-in-10 buyers (9%) have made lump-sum payments between £1,000 and £2,499 to accelerate repayment.
To shorten their mortgage term, buyers are saving more (57%), budgeting more strictly (55%), taking a second job (29%), cutting back on holidays and lifestyle spending (29%), and reducing pension contributions (18%). Only 3% said they were not taking any steps to pay off their mortgage sooner.
TSB found that paying off a mortgage is now a higher priority than saving for retirement for most new homeowners, with 68% placing mortgage repayment above boosting their pension pot (25%).
Among those not making overpayments, the main barrier was affordability (47%), followed by the desire to keep a safety buffer (28%), saving for a family (22%), job security concerns (19%), and lifestyle priorities such as holidays (18%).
TSB’s own first-time buyer data for Q3 shows the average age of buyers has fallen from 32 to 31, while the average mortgage term has also shortened.
London continues to have the highest average age at 33, compared with 30 in Wales and Scotland.
The South East and Scotland both accounted for 16% of first-time buyer completions, followed by the North West at 11%.
At the other end of the scale, East Anglia made up just 4% of completions, Wales 5%, and the East Midlands 7%.
The gap in affordability across regions remains wide, with average deposits ranging from £140,000 in London to £18,000 in the North East and £24,000 in Wales.
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.”
