Homeowners more likely to save than pay more off on mortgage

Twice as many homeowners put money aside in a savings account rather than pay down their mortgage

Twice as many mortgage holders choose to put extra money into a savings account rather than pay more towards reducing their mortgage debt, according to research from first direct.

Research has shown that overpaying on a mortgage offers better longer term rewards than saving however, in these uncertain economic times, people have become reluctant to pay down mortgage debt and feel it is more valuable to have a savings account as a safety net. 

The research also found that 43% of mortgage holders were unaware of the total cost of their mortgage including interest. Around the same amount were unaware of the over payment limit on their mortgage while 31% didn't know the interest rate on their mortgage.

About a quarter did not know whether or not they are allowed to overpay on their mortgage while 15% were unsure of the outstanding amount on their mortgage.

Senior Mortgage Manager at first direct Richard Tolchard commented, "People continue to try to put some money to one side and mortgage holders are no different... more often than not, they choose to feed extra money into a savings account."

Tolchard suggests switching to an offset mortgage, which acts as a savings account and also reduces net borrowing. Crucially it gives customers the flexibility to access their savings, if they need them.