More than one in six first-time buyers hope to be mortgage free by the age of 40, according to TSB’s latest quarterly mortgage report, which highlights a growing trend towards overpayments among younger homeowners.

The research, carried out by Censuswide for TSB, found that 67% of first-time buyers who had purchased a property in the past five years are making mortgage overpayments, with almost three-fifths (57%) aiming to shorten the term of their loan.

Of those who are overpaying, more than two-fifths (43%) make additional payments every month. Around one in five (20%) typically pay between £200 and £299, while 17% contribute between £300 and £399.

9% have made lump sum payments of between £1,000 and £2,499 in an effort to reduce their balance more quickly.

TSB’s data shows that buyers are making lifestyle adjustments to achieve their goal. Among those looking to shorten their mortgage term, 57% said they were saving more, 55% were sticking to stricter budgets, and 29% had taken a second job.

The same proportion said they were cutting back on holidays and discretionary spending, while 18% had reduced pension contributions. Only 3% said they were taking no action to reduce their mortgage term.

Almost seven in 10 (68%) said paying down their mortgage was a higher priority than increasing pension savings, which just a quarter (25%) cited as their main focus.

REASONS FOR NOT OVERPAYING

Among the 33% of first-time buyers not making overpayments, the most common reason was affordability, cited by 47%. Others preferred to keep a financial buffer (28%), save for a family (22%), or were concerned about job security (19%). Around 18% said they would rather prioritise holidays and lifestyle spending.

TSB’s own lending data for the third quarter revealed that both the average mortgage term and the average age of first-time buyers had fallen from 32 to 31. The South East and Scotland each accounted for 16% of first-time buyer completions, while the North West made up 11%. At the other end of the scale, East Anglia and Wales saw the fewest completions, at 4% and 5% respectively.

London maintained the highest average age of first-time buyers at 33, compared with 30 in Wales and Scotland. The difference in deposits across the UK also remains stark, ranging from an average of £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.”