How to reduce your monthly mortgage payments
Are you a few years into your mortgage and wishing your monthly repayments were cheaper? Rest assured there are several steps you can take to reduce your monthly mortgage payments so that you have enough left over each month to enjoy yourself.
Try to make overpayments on your mortgage when you can afford to, be it a few hundred pounds or a lump sum – such as if you receive a bonus at work or inherit some money.
Making overpayments will reduce your mortgage term, which means you’ll pay less interest in the long run. However, before you start making overpayments, check with your lender to make sure there aren’t any penalties for repaying your mortgage early.
Find a cheaper mortgage rate
Leaving your existing lender before your contract term is over may incur fees, but it could be beneficial to switch lenders when your term is up. If it looks like rates are steady, consider a better mortgage rate for a shorter term to reduce your monthly mortgage payments.
Check your mortgage insurance
If your deposit was less than 20% you may have been sold private mortgage insurance (PMI), which can increase your mortgage by thousands of pounds every year. However, you can cancel your PMI once you have paid off 20% of your mortgage. Your lender won't tend to tell you that you can cancel your PMI, so you must specifically ask them to cancel the insurance.
Increase your mortgage term
If you don’t mind paying more in the long-run, you can increase your mortgage term to reduce your monthly repayments. Even if you increase your mortgage term, there is the option to make overpayments to reduce the term, but you will pay more interest if not.
Increasing your mortgage term is a worst-case scenario. To make the change, speak to your lender. Follow our guidance to reduce your monthly mortgage payments to more manageable amounts.