"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"
- Craig Calder - TSB
Just over one-in-six (17%) first-time buyers who purchased a property in the last five years hope to be mortgage-free before the age of 40, according to TSB’s latest findings. The bank also reports that more than two-thirds (67%) of first-time buyers are making overpayments on their mortgages.
Censuswide surveyed slightly over 1,000 first-time buyers who bought a home within the past five years. The results show that almost three-fifths (57%) aim to reduce their mortgage term. Of those making overpayments, 43% do so monthly.
The size of these overpayments varies:
One-in-five (20%) contribute £200-299 each time
One-in-six (17%) pay between £300-399
Just under one-in-10 (9%) make lump sum payments of £1,000-2,499
To shorten their mortgage, first-time buyers are adopting a range of strategies. TSB found that 57% are saving more, 55% are budgeting strictly, 29% are taking a second job, 29% are reducing holidays and lifestyle spending, and 18% are cutting pension contributions. Only 3% reported taking no steps to reduce their mortgage term.
Paying down the mortgage is a clear priority, with almost seven-in-10 (68%) saying it matters more than increasing pension contributions (25%).
For the third (33%) of first-time buyers not making overpayments, affordability was the main barrier (47%). Other reasons included maintaining a safety buffer (28%), saving for a family (22%), job security concerns (19%), and choosing to prioritise lifestyle spending like holidays (18%).
TSB also reviewed its Q3 data for first-time buyers, showing that both the average mortgage term and average age have dropped from 32 to 31. London has the highest average age for first-time buyers at 33, while Wales and Scotland have the lowest at 30.
Completion rates vary across regions:
The South East and Scotland lead with 16% each
The North West follows at 11%
East Anglia (4%), Wales (5%), and the East Midlands (7%) had the fewest completions
There is a wide gap in deposit amounts across the UK. In London, the average deposit was £140,000, compared with £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.”
