You are here: Home - Mortgages - First Time Buyer - News -

Savvy millennials opt for repayment mortgages

0
Written by:
05/07/2017
Whether out of choice or necessity, millennials are far more likely to have a repayment mortgage than older borrowers.

Nine in ten (92%) of 18 – 34-year-olds are on a repayment mortgage, against 68% of those aged 55 and over, according to research from L&C Mortgages. Unsurprisingly, they also have the highest monthly repayments at £908 vs £430 for the over 55s.

Millennials have suffered from the lack of availability of interest-only mortgages in the wake of the 2007 global financial crisis. Although interest-only mortgages have made a reappearance in recent years, they have often been limited to higher earners or those with a significant deposit.

However, there are also signs that the younger generation prefer a secure option. Seven in ten (69%) opted for a fixed rate deal, and a quarter have remortgaged to get a better deal, higher than any other age group. Only a third (35%) of over 55s have a fixed rate deal and only 18% have remortgaged.

Similarly, those aged 18-35 are most likely to have remortgaged to reduce their monthly payments (34%), again beating the older generations, with only 19% of those aged 55 and over citing this as a reason for remortgaging.

Concerns have been raised about the number of older borrowers with interest-only mortgages. The FCA estimates that 600,000 interest-only borrowers will see their mortgages mature before 2020 and many have little provision in place to pay off the capital. Recent statistics from the Equity Release Council show that around a quarter of its products are being used to pay off interest-only loans.

David Hollingworth from L&C Mortgages, said: “Our research shows that young people are, on the whole, taking the savvy steps needed to ensure they haven’t bitten off more than they can chew in terms of covering their mortgage payments. Using a fixed rate mortgage is a good way of managing what is most likely your biggest outgoing.”

A third (33%) of 18-34 year olds have taken out an offset mortgage. Of those with an offset mortgage, a quarter (24%) used their savings in order to reduce their term, and 10% to reduce their monthly payments. In contrast, only 11% of those aged 55+ have an offset mortgage and use their savings against their mortgage.

See YourMoney.com’s guide to Offset mortgages for more information.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2347784-graduate-dv1850052
Students graduate with an average of £50k debt

English graduates have the highest student debts in the developed world as they leave university with an average of £50k...

Close