Two thirds of people aiming to be mortgage free by age 50

New research by The Co-operative Bank Mortgages reveals that almost two thirds of mortgage holders (62%) are aiming to be mortgage-free by the time they reach 50 years of age. 

The findings reveal how paying off the mortgage would change peoples lives with over half of people (52%) stating that they would take more holidays, just under a third of people would turn their attention to saving more for retirement (31%) and a quarter of people would look to change their working lives by either finishing work or moving to part time hours (27%).

As a result many people have been making mortgage overpayments, with the top reason cited for this to reduce the term of the mortgage (31%). Other people are looking to take advantage of the low interest rate environment (21%), and the fact that they have more disposable income as a result of reductions in their mortgage rate (13%).

At The Co-operative Bank currently most customers within their initial mortgage deal period are allowed to make overpayments of up to 10% of their mortgage balance per year, without any penalties, and customers on lifetime trackers and standard variable rates have no restrictions on overpayments.

At the end of last year, The Co-operative Bank launched a pilot scheme, offering customers who have already made significant overpayments, the option to make additional capital repayments of up to 50% of their entire mortgage without penalty. Building on these findings and to start off this new financial year, The Co-operative Bank Mortgages has refreshed the amount available for customers included in its capital repayment pilot scheme with an additional 50% available for 2010. This means that those people who have already made capital repayments in the December launch of the scheme will now have an additional 50% limit for the year ahead.

James Hillon, Head of Mortgages at The Co-operative Bank, comments, "The research clearly shows that many mortgage holders are looking to take advantage of the low interest rate environment by making overpayments.  Since the launch of our capital repayments pilot scheme we have had a significant interest from customers and as a result we are continuing to monitor the scheme in detail, with a view to looking at rolling out the scheme to more customers if successful."