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If you want to lower your mortgage payments but are unable or unwilling to remortgage, there are alternative options you can explore.
Extending the mortgage term
One method of reducing your mortgage payments is to increase the term of your mortgage, assuming it meets the lender’s criteria. However, it’s important to note that the longer you extend the mortgage term, the more interest you will end up paying over time.
Let’s consider a £100,000 mortgage with a 3.5% interest rate. We’ll compare the monthly mortgage payments for a 25-year term versus a 35-year term.
25-year term – £498.93 per month
35-year term – £498.93 per month
By extending the mortgage term from 25 years to 35 years, the monthly payment decreases by about £51.57. However, it’s important to note that extending the term will increase the overall interest paid over the life of the loan.
Switch to interest-only
Switching to an interest-only mortgage is an option to reduce your monthly mortgage payments. However, it’s important to note that there are certain requirements and considerations involved:
Firstly, lenders typically require a minimum equity of 25% in your property before allowing you to switch to an interest-only mortgage. This means you should have already paid off at least 25% of the property’s value.
Additionally, to qualify for an interest-only mortgage, you may need a repayment vehicle. This could be in the form of savings, investments, or another property. The purpose of the repayment vehicle is to demonstrate to the lender that you have a plan in place to repay the principal amount at the end of the mortgage term.
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Let’s consider a £100,000 mortgage with a 3.5% interest rate and compare the monthly payments for an interest-only mortgage and a repayment mortgage over 25 years.
Capital repayment – £498.93 per month
Interest-only – £291.67 per month
Comparing the two options, the interest-only mortgage offers a lower monthly payment of approximately £291.67, but it does not contribute towards reducing the principal balance. In contrast, the repayment mortgage has a higher monthly payment but allows you to build equity and eventually pay off the loan.
Remember, these examples are for illustrative purposes, and actual mortgage rates and terms may vary. It’s important to consult with a mortgage advisor like Strive or lender to get accurate and personalised information based on your specific circumstances.
Review your insurances
To save money on your mortgage or associated costs, reviewing your insurance policies, such as household insurance, life insurance, and critical illness insurance, is a recommended approach.
By shopping around and comparing quotes from different insurance providers, you may find options that offer the same coverage at a lower cost. This allows you to reduce the expenses associated with insurance cover while still maintaining the necessary protection for your home and personal circumstances.
It’s important to carefully evaluate the terms, coverage, and reliability of different insurers to ensure you make an informed decision and select the most suitable and cost-effective insurance options.
Take a payment holiday
Take a payment holiday (subject to lender agreement): Some lenders offer the option of taking a payment holiday, allowing you to temporarily pause or reduce your mortgage payments for an agreed-upon period, usually up to several months.
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Ashley Oldershaw2025-03-12Trustindex verifies that the original source of the review is Google. We worked with Jack, who was very clear in his explanations, spent some time learning about our situation and presented us with our options and the pros and cons of each. He was also very proactive and understood that this was unfamiliar territory for us. Jack made sure that he did everything he could to provide a smooth process from start to finish, which helped us out a lot. Thanks, Jack! Farshad Farzaneh2025-03-11Trustindex verifies that the original source of the review is Google. Jack Johnson is the mortgage broker we used from Strive mortgages and he has been very helpful and an absolute easment for the whole process of getting a mortgage. He's easy to get hold of and makes plenty of time for his clients. He has useful contacts across the industries (banks and estate agents) which can be helpful in many circumstances, especially for quick answers and resolutions to problems. Mark Williams2025-03-11Trustindex verifies that the original source of the review is Google. Jamie has been consistent in providing me with an excellent service over many years, so I wouldn't dream of using anyone else. I've also recommended him to friends and family. Peter Macciochi2025-03-11Trustindex verifies that the original source of the review is Google. James has always been detailed but extraordinarily helpful. Always get the best advice and deals out there - simply do not go anywhere else !! Matt Ploszajski2025-03-08Trustindex verifies that the original source of the review is Google. They did a great job arranging our mortgage. Very supportive and talked us through everything very clearly. Polly Alice2025-03-08Trustindex verifies that the original source of the review is Google. Highly recommend the service. Jack was a great help answering any questions I had about the process. Great value for money, and makes the whole process less daunting. Samantha Kilford2025-03-05Trustindex verifies that the original source of the review is Google. I highly recommend Jack and the team at Strive Mortgages. As a first time buyer, I was entirely clueless and Jack has been incredibly helpful at de-mystifying the entire process. Everything has been efficient and as stress-free as possible. A real top-notch advisor, Jack is always available to answer questions and provide expert guidance - I couldn't ask for more! mark slade2025-03-02Trustindex verifies that the original source of the review is Google. Absolutely fantastic. On your side right from the start. I will be recommending Strive Mortgages at every opportunity. Thank uou so much!! H W2025-02-25Trustindex verifies that the original source of the review is Google. Very professional and efficient service that always has your best interests at heart.They set up a WhatsApp group to enable my wife and I to have seamless and rapid communication with the broker on both the mortgage application process and any general queries we had in relation to mortgages.I would highly recommend them to anyone looking to take the stress out of moving. R A2025-02-25Trustindex verifies that the original source of the review is Google. Jamie and his team at Strive Mortgages have been fantastic from start to finish. The process was so smooth and efficient. Jamie was always so easy to get a hold of to answer any queries we had and ensured we were happy and comfortable throughout.Id highly recommend anyone to use Strive Mortgages and will certainly continue to use Strive for all our mortgage needs!
This can provide short-term relief if you’re experiencing financial difficulties. However, it’s important to note that taking a payment holiday is subject to your lender’s agreement and specific terms. During the payment holiday, interest will still accrue, and the missed payments will be added to the outstanding balance, potentially increasing your monthly payments in the long run.
It’s crucial to discuss the implications with your lender and consider the impact on your overall mortgage term and interest costs.
Switch to a new deal
If you are currently on a standard variable rate (SVR) or a tracker mortgage, switching to a fixed-rate mortgage can often result in savings on your monthly mortgage payments. Standard variable rates are typically higher than fixed rates, so by switching to a fixed-rate mortgage, you can lock in a lower interest rate for a set period.
The advantage of switching to a fixed rate with your current lender is that you may be able to do so through a product transfer. A product transfer allows you to switch to a different mortgage product offered by your current lender without the need for a full remortgage process.
This can be a convenient option if you prefer to stay with your current lender or if you want to avoid the costs and paperwork associated with remortgaging elsewhere.
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Rent a room out
If you have extra space in your home or own additional properties, you may consider taking in a lodger or renting out your property. This can generate rental income that can be used to offset your mortgage payments.
However, it’s important to check with your mortgage lender to ensure you have the necessary consent to let the property, as some mortgages have restrictions on renting out properties without permission.
Additionally, becoming a landlord involves responsibilities such as tenant management and property maintenance, so it’s essential to familiarise yourself with the legal and financial obligations of being a landlord.
For more information on lowering your mortgage repayments, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
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