Majority of young homeowners paying off mortgage faster than planned

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

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

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

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

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.”

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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.