One-in-six hope to be mortgage free by age 40 – as over two-thirds make overpayments, TSB finds

Just over one-in-six (17%) first-time buyers surveyed, who purchased a property in the last five years hope to be mortgage free before 40 – as TSB finds over two-thirds (67%) are making mortgage overpayments.  

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 who have made overpayments, over two-fifths (43%) make them monthly. 

One-in-five people (20%) make overpayments between £200-299 each time; one-in-six (17%) pay £300-399 – and TSB found that just under one-in-10 (9%) make lump sum payments between £1,000-2,499 to get ahead on their mortgage.  

To shorten their length of mortgage, TSB found recent first-time buyers are (or plan to be) saving more (57%), budgeting more strictly (55%), taking a second job (29%), forgoing holidays and lifestyle spend (29%) –  and reducing pension contributions (18%). Just three percent said they are not taking any steps to reduce their mortgage term. 

Almost seven-in-10 (68%) said that paying down their mortgage is a bigger priority than boosting their pension pot (25%). 

For the third (33%) of first-time buyers not making overpayments, the main barrier was affordability (47%), followed by preferring to keep a safety buffer (28%), saving for a family (22%), job security concerns (19%), and prioritising the now, with holidays and lifestyle spend (18%).  

Highlights from TSB first-time buyer Q3 report (tables below) 

TSB also analysed its first-time buyer data for Q3 and found that both the average mortgage term, and average age of first-time buyers has reduced from 32, to 31.  

London maintained the highest average age of first-time buyers, at 33 – with Wales and Scotland the lowest, at 30.  

The South East (16%) and Scotland (16%) had the most first-time buyer completions, followed by the North West (11%).  

East Anglia (4%), Wales (5%) and East Midlands (7%) accounted for the fewest. 

Showing the gap between London and parts of the UK – the average value of a deposit was £140,000 in London, compared to £18,000 in the North East, and £24,000 in Wales. 

Craig Calder, Director of Mortgages, 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.”