For most of us, monthly mortgage payments likely to be the biggest payments we’re making every single month. Whilst that’s likely to remain the case throughout the course of your repayment plan, there are various ways to reduce how much you’re paying out on a monthly basis.
There are numerous reasons you may want to reduce the amount you are paying it on your mortgage – you could be having issues with your salary or other income, the could be a vacation or other major purchase on the horizon which will require more of your money, or you may simply be looking for a better deal on your interest rate and repayment terms. No matter what the reason, making adjustments to the amount you repaying on your mortgage is entirely possible.
The first and most obvious step is to shop around for a better mortgage deal. The first key aspect of doing this is to ensure there are no penalties for switching your existing mortgage, as this could end up costing you more money than you would save. This is typically something which is in place during the first few years of your mortgage, but this will vary depending on your lender and your contract terms.
The main thing to look for will be a lower rate of interest, and many lenders have introductory deals offering reduced rates for the first couple of years of your repayments. This can involve a fixed-rate where you know exactly how much you’ll be paying each month, or a tracker rate which will fluctuate depending on the base rate. Fixed-rate mortgages offer more security in the sense that you will know exactly how much you’ll paying out each month, but it may not always be the cheapest option the base rate is favorable.
Lowering Your Payments
If you reason for looking to reduce your mortgage payments simply because of another short-term expense, your mortgage broker may be willing to reduce your monthly payments for a limited period of time. Some lenders may charge extra for this, such as an additional administration charge, but this will vary from bank to bank.
You may be able to switch to interest-only payments for a short period of time or reduce your monthly outlay by extending the repayment period for the mortgage. Extending the repayment period will most likely result in you paying more interest over the course of the loan, but it can be a useful way of freeing up some money to cover any short-term emergency financial situations.
Another method of reducing the amount you are paying each month is to cut out the various add-ons which may be involved in your mortgage repayment, such as payment protection or other insurance policies which you signed up for initially.
Although this is not always possible depending on the terms of your initial contract, it’s often worth enquiring about reducing or stopping these payments for a short period of time. While there is an obvious risk involved in this, can be a worthwhile move for some people depending on their current financial situation.
The final option will be to look at remortgaging your property and stretching the repayments over a longer period of time. While this is a big commitment, your current financial situation may be substantially different from what it was when you initially took out your mortgage.
You may do this to reduce your monthly payment, repay the loan over a longer period or to take advantage of the cheap mortgages being offered by a particular lender. Each option should free up some additional money every month, although you should always be aware of the increased repayment period likely to be involved.
While paying off your house is likely to be the biggest financial investment of your life, there’s usually some room to save money on your mortgage repayments if you shop around. If you’re looking to save money in the long term, or simply free up some cash for some home renovations or a new car, there are plenty of options out there.