New research from L&C Mortgages has revealed just how savvy millennials in Britain are when it comes to managing their mortgages.
L&C found that 92% of 18-34 year olds have a repayment mortgage deal, so they are gradually chipping away at the capital.
They have also made sure they won’t be caught out in their monthly budgeting – with 69% opting for a fixed rate mortgage, much higher than the 35% of over-55s who have gone for a fixed deal.
Millennials are making the highest monthly repayments of any group with average contributions of £908 per month as they deal with larger mortgage debt.
The research found that a quarter (25%) of millennials have remortgaged to get a better deal, higher than any other age group.
By comparison, only 18% of those over 55 have ever remortgaged to get a better deal. 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.
L&C said that the younger age group was more likely to remortgage as they need to shop around to secure the best value possible, especially as they typically have a larger mortgage and monthly payments than older borrowers.
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 – but it is always worth getting advice on what’s the best deal for you, especially as a first-time buyer.”
Highlighting their openness to mortgage options that could help manage their costs, 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 and over have an offset mortgage and use their savings against their mortgage.
Hollingworth said: “Although the younger generation certainly face challenges when it comes to taking out a mortgage, the older generation hasn’t necessarily had it easy. The FCA estimates that 600,000 interest-only borrowers will see their mortgages mature before 2020, and that many risk being left without adequate provision to pay off the remaining amount on their loan.
“Our figures have found that only a small percentage of those over 55 have ever remortgaged for a better deal. Although some may be reaching the end of their mortgage others may have found lending criteria has limited their choices. Lenders have limited the maximum age at the end of the mortgage to 70 or 75. However some lenders are more flexible and it makes sense for the over 55s to follow the lead of the millennial generation, who seem to be taking a more active role in managing their mortgages.”
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