As many as 67% of first-time buyers pay too much on their mortgage, while many hope to be mortgage-free by the age of forty.
This is evident from a new analysis by mortgage provider TSB, which showed that more starters are focusing on becoming mortgage-free than on saving for their pension.
It appears that paying off the mortgage is a financial priority for 68% of those taking their first step on the property ladder, compared to 25% looking to increase their pension pot.
Censuswide surveyed just over 1,000 first-time buyers who had bought a home in the past five years – and found that almost three-fifths (57%) were hoping to shorten the term of their mortgage.
Of those who have paid too much, more than two-fifths (43%) do so monthly. The most common overpayment amount was between £200 and £299 each time, then between £300 and £399.
But TSB found that 9% made lump sum payments between £1,000 and £2,499 to get ahead on their mortgage.
Other methods first-time buyers used to shorten the term of their mortgage included saving more, budgeting more stringently, taking on a second job or forgoing holiday and lifestyle expenses. Some had even decided to reduce pension contributions.
For the third (33%) of first-time buyers who don’t overpay, the top barrier was affordability, followed by maintaining a safety buffer, saving for a family, worrying about job security and prioritizing the now, with holidays and lifestyle spending.
Craig Calder, mortgage director at TSB, said: “Recent first-time buyers are prioritizing overpayments over building savings, pension contributions and holidays in the hope of becoming mortgage-free earlier in life.
“Overpaying can be a good way to shave years off your mortgage, and we recommend you include this in your wider financial plan to help you feel confident in your savings, budgeting and retirement.”