Homeowners take advantage of low interest rates

Savvy home-owners are taking advantage of today's low interest rates to pay off their mortgages in record time.

first direct reveals more than one in 10 (11 per cent) homeowners stand to pay off their mortgage early - within the next decade - by taking advantage of current market conditions.

Record low interest rates and smart mortgage moves are helping homeowners bring forward this ‘freedom day'. A quarter (24 per cent) of mortgage holders are currently on course to pay off their mortgage within 10 years and this could rise to over a third (35 per cent) with smart money management.

Mortgages paid off sooner than ever

The average time between a first house purchase and outright ownership has fallen from 32 years a decade ago to 30 years in the current economic climate.

This will come as good news to the eight in 10 (83 per cent) mortgage owners hoping to pay off their mortgage earlier than scheduled - with the average home-owner aiming to shave three years off the duration of their mortgage.

first direct spokesman, Jimmy Kelly, said: "Although first-time buyers are entering the market later than ever before - the average Brit now steps on to the housing ladder at the age of 34, compared to 29 in the 1970s - the aspiration to reach freedom day as early as possible has never been stronger. Our research shows more than a third (36 per cent) of home-owners know exactly which year they expect freedom day to come.

"For many, a mortgage represents the biggest debt they will ever have - the typical householder will have five mortgages over their lifetime, which is a massive commitment. By making sound financial decisions and choosing a flexible mortgage such as an offset, freedom can be closer than ever before."

Celebrating Freedom Day

The first direct research reveals that becoming an outright home-owner represents freedom to many. More than half (58 per cent) rank paying off their mortgage as the most effective route to freedom - beating retiring from work (42 per cent), foreign travel (46 per cent), hiring domestic staff like cleaners (22 per cent) or children leaving home (13 per cent).

For close to two thirds (63 per cent) of mortgage holders, ‘freedom' will be achieved by good money management. One in five (21 per cent) believe they can get to freedom quicker by switching to an offset mortgage, while a further third (34 per cent) believe they will get to freedom day quicker by switching mortgage providers.

Celebrating freedom day sees 28 per cent throwing a party, dinner party or meal out, and one in five (18 per cent) cracking open a bottle of bubbly. One in six (16 per cent) celebrate by splashing out on a new car or big ticket purchases for the home, and one in ten (ten per cent) plan a holiday or mark the occasion

Other findings:

Women are more ambitious about bringing forward freedom day than men, aiming to shave off 3.3 years from their mortgage compared to 2.6 year for men

46 per cent of outright homeowners celebrated the day they paid off their mortgage, with younger homeowners significantly more likely (20 per cent more likely) to mark freedom day than their older counterparts