How to Lower Your Mortgage Repayments

When you’re looking to lower your mortgage repayments it can often feel as though there are either too few options – or too many. This is frequently down to homeowners trying to Google their way to the right solution rather than speaking to an expert.

But mortgages are complex financial products and choosing the wrong option can be costly. So, it makes sense to speak to a broker first – especially if there’s a chance of a free no-obligation chat.

How can you lower your mortgage payments?

There is no substitute for speaking to a broker when looking to reduce your monthly repayments. Weighing up the advantages and disadvantages of each alternative requires an expert. A broker will help you accurately calculate the overall cost of borrowing as well as the immediate impact on your monthly outgoings.

Options include:

• Remortgaging onto a lower rate: This could be with your existing lender or by switching to a new one. If your current loan is up to date and you still match your lenders’ criteria, they might offer you another deal. But you could find switching providers lowers your payments even more. So, you should always speak to an experienced remortgage broker to ensure you get the best deal on the market according to your circumstances.
• Term extension: Paying your loan over a longer period will reduce your monthly repayments in the short term but increase the amount you pay overall. Sometimes, this is the best course of action. But to avoid increasing the amount you pay unnecessarily, find a broker who understands your situation and will check what other deals are available to you first.
• Switch to interest-only: Again, this is usually a short-term fix and should not be taken lightly. It will reduce your monthly mortgage repayments but typically results in other additional monthly costs to cover clearing the balance at the end of your mortgage term. It’s paramount that you make a clear long-term plan before switching to interest-only. And it’s never a decision you should take without consulting a professional.
• Pay off a lump sum: If you have significant savings or have recently received a lump sum, this may be your best option. Remember, though, that once you’ve paid that lump sum off, what was once liquid cash is then tied up in your property. You also need to make sure you don’t overpay too much and incur a penalty from your lender.

How a mortgage broker can help you lower your payments

First and foremost, a mortgage broker will narrow down your options. This will make your decision more manageable.

Often, there is no definitive answer as to which is the best way to reduce your monthly payments. But with the help of a broker, you can be sure the one you choose is right for you.

We work with brokers who have whole of market access and can present you with a selection of deals that meet your short and long-term goals. They’ll clearly explain the advantages and disadvantages of each to help you make the best and most cost-effective decision.

Get in touch today to speak to an expert and make a start on reducing your mortgage payments.

Ways to lower your payments without refinancing

If you can’t (or don’t want to) refinance to reduce your mortgage repayments, don’t worry.

There are other options available to you, including:

Switching to a different type of mortgage

Most mortgage providers have an introductory offer with a low-interest rate to help them attract new customers. However, once the honeymoon period is over, you will be switched to an SVR mortgage, which is usually much more expensive than a tracker or fixed-rate mortgage.

To save money, approach your mortgage provider and discuss being moved to a more favourable product. They are keen to keep customers, so they may arrange a better deal to prevent you from going to another mortgage provider.

Mortgage payment holidays

As a possible alternative to refinancing, Mortgage payment holidays are also available if it has been over 12 months since you took your mortgage out and you have not taken any additional borrowing in the last six months.

You are also able to request a payment holiday if you live in the property and it is your main home, you have not taken payment holidays for more than six months total and the amount you owe on your mortgage is less than 75% of the home’s value.

Be sure to take professional advice before agreeing to take a mortgage payment holiday. There are pitfalls to consider and possible alternatives to mull over before you decide whether deferring your mortgage payments is the right way to go.

Changing mortgage insurance

Your mortgage repayments may include Private Mortgage Insurance (PMI), especially if you paid less than 20% deposit, and this can add thousands of pounds to your mortgage each year.

On average PMI premiums can range from 0.5% to 1% of the entire mortgage, which can add up to a substantial amount over the term of the loan.

You can cancel your PMI when you have paid off 20% of the mortgage, but you will need to tell your mortgage provided that you no longer want PMI.

Lodgers and mortgage insurance savings are pretty much the only ways to reduce your house payments without at least some form of refinancing. But the good news is that there are fallback options which allow you to save money with only minimal changes to your mortgage.

Taking in a lodger

Many people have a spare room, especially if the kids have left home. So a work colleague who faces a long commute, or even a student might make suitable lodgers.

While this is not technically a way to reduce your mortgage payments, it can significantly offset your repayments.

You can earn up to £7,500 a year tax-free under the Government Rent-A-Room Scheme.

This can be a big decision, so take the time, do a little research, and find out the pros and cons of taking in a lodger. Your local council may have guidelines that you might find useful.

Lowering your payments if you have bad credit

Whether your credit issues occurred before or since you took out your current mortgage, there may be several options open to you here:

• Remortgaging remains a possibility but may require a specialist bad credit lender.
• You could look to extend your term with your current provider or switch to a longer term loan with a specialist provider.
• Interest-only may be an option but shouldn’t be done without first speaking to an expert.  This route will result in you having to make plans to clear the outstanding mortgage balance at the end of your term.

A chat with one of the bad credit brokers we work with is completely free and can help relieve the stress of going it alone.

Why use Online Mortgage Advisor?

The first step to finding the best way to reduce your monthly mortgage payments is to find the best broker for your situation.

We work with brokers all over the UK who specialise in different mortgage sectors. Whatever your situation, after a few quick questions we’ll handpick a broker just for you. This service is completely free and won’t affect your credit file. So, you have nothing to lose.

Call today on 0808 189 2301 or enquire online to find out how much you could reduce your mortgage payments by..