Last reviewed on 29th September 2021
How can I reduce my monthly mortgage payment?
Reducing your monthly mortgage payment is possible, but you may need your lender’s consent. That being said, there are several ways to reduce your monthly mortgage payments that don’t always require consent from your lender.
Make sure your mortgage isn’t on a standard variable rate (SVR)
It may sound obvious, but you’d be surprised by the number of homeowners that have standard variable rate (SVR) mortgages.
If you have a mortgage on an SVR, simply switching your mortgage can reduce your monthly mortgage cost quite considerably. A mortgage on an SVR is the most expensive way to repay your mortgage, so it makes financial sense to switch deals.
Each mortgage has an introductory period, which is usually fixed for 2, 3 or 5 years. Once this period ends, your mortgage will automatically switch to a standard variable rate, which is typically more expensive.
By switching deals, you’ll enter into another introductory period with rates likely to be cheaper than an SVR.
Extend the term of your mortgage
Extending your mortgage term can bring your monthly mortgage payments down. This is because you’re paying your mortgage over a longer period of time. That being said, extending your mortgage term has its disadvantages too.
Although your monthly payments will be cheaper, you’ll pay more interest on the mortgage over your term, not to mention being tied down to a mortgage for longer. Nonetheless, extending your mortgage term can reduce your monthly payments and make your mortgage more manageable.
Make overpayments on your mortgage
This may sound strange, but overpaying your mortgage can bring your balance down quicker, eventually reducing your monthly mortgage costs. This can be ideal if you have surplus capital each month.
Overpaying your mortgage will of course cost more each month to begin with, but you’ll pay less interest over your mortgage term.
Some lenders won’t allow you to overpay, or you may be charged an early repayment charge (ERC) if you redeem your mortgage too early. With that in mind, check the terms and conditions of your mortgage before you make a decision.
Switch to a better deal
Shopping around for a better mortgage deal can reduce your monthly payments. That being said, a low-interest rate doesn’t always mean that you’ll be on a better deal.
This is why you’ll need to assess the costs involved in switching mortgages in addition to the mortgage rate itself.
If you switch your mortgage during a fixed term, you may be charged an ERC so do check beforehand with your existing lender.
How can I calculate my monthly mortgage?
Use our monthly mortgage calculator by entering details such as:
- Deposit amount
- Mortgage amount
- Your mortgage term
- Interest rate of the mortgage
We’ll then calculate what you pay for your mortgage each month. Furthermore, you can compare the cost of a repayment mortgage with an interest-only mortgage to calculate the difference.
Can a mortgage advisor calculate my monthly cost intead?
Although online mortgage calculators are great tools for providing estimations and approximate costs, a mortgage advisor can give you an accurate figure.
The reason mortgage advisors are able to calculate your monthly costs more accurately, is because we can assess your overall financial profile. This is exactly what underwriters do when you apply for a mortgage.
You can make an enquiry to speak to an advisor who can then calculate your mortgage for you.