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

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

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.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

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...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
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