A mortgage can be a big part of your outgoings. If you’re looking to free up your cash flow, you may want to find a way to reduce your monthly repayments.
Speak to a mortgage adviser if you’re not sure what option is best for you. Before you make any changes, make sure you agree them first with your provider.
Standard Variable Rate (SVR)
When you come to the end of a mortgage deal, you will automatically be put onto the SVR, unless you arrange a new deal. The SVR can be higher than a new deal rate. Finding a new deal instead could mean that you save money.
Switch to a cheaper deal
Even if you avoided the SVR and got yourself a deal, it’s still worth comparing rates to see if you could save money by switching. If the value of your home has gone up, it may mean you can get a better deal than before.
When working out if you can save, don’t forget to account for any extra costs such as early repayment charges (ERCs), valuation or product fees.
Increase the term you’ll pay over
The longer you take to pay off your mortgage, the less your payments are each month.
If you extend your term, you will end up paying more interest overall. If you can afford to pay more later on, you may be able to reduce your term again. Any changes will need to be agreed with your mortgage provider.
Consider an offset mortgage
An offset mortgage is a way of linking your mortgage with your savings. Instead of earning interest on your savings, it reduces the amount of interest charged on your mortgage. So the more savings you have, the less interest you pay.
You still have access to your savings but if you dip into them, your mortgage payments will go up.
Pay more now so you can pay less in the future
Paying more may sound a bit odd for a list like this, but it’s all about planning. If you know you want to pay less in future, taking action now will help. You may be planning to start a family, or to go part-time at work.
By paying more now, either as a lump sum or regular payment, you can reduce the amount you need to pay in future. Find out the limit of how much you can overpay a year before you take any action. If you pay too much, you may be liable for an early repayment charge.
If you’re struggling to pay your mortgage it’s important to speak to your mortgage provider straight away. They will be able to support you.
The content on this page is for reference and does not constitute financial advice. For impartial financial advice, try MoneyHelper.