Practical steps to lower mortgage expenses and enhance affordability
Mortgage payments are the biggest expense for many households. As borrowing costs have increased in recent years, reducing these payments has become an important goal for many.
There are various ways to achieve this, from switching products to adjusting repayment terms. Each method has its own trade-offs, but together they provide borrowers with tools to alleviate financial pressure.
1. Remortgage to a better deal
When an initial fixed or tracker period finishes, borrowers are often transitioned onto their lender’s standard variable rate. These rates are usually higher. Securing a new deal before this occurs can reduce monthly payments and avoid sudden rate hikes. Many lenders now permit a new product to be arranged up to six months prior to an existing deal’s end.
2. Extend the mortgage term
Extending the loan over a longer period lowers monthly payments by spreading out the debt more evenly. This offers short-term relief but raises the overall interest paid throughout the mortgage’s duration. Half of all new first-time buyer mortgages now last longer than 30 years, compared to about a quarter a decade ago[1].
3. Switch to interest-only
Temporarily switching to an interest-only arrangement can substantially lower monthly payments, though the capital must still be repaid later. The Financial Conduct Authority’s (FCA) Mortgage Charter permits borrowers to switch to an interest-only mortgage for up to six months without undergoing a full affordability reassessment[2]. (Subject to conditions).
4. Make overpayments when possible
Making overpayments reduces the outstanding balance faster, which lowers the long-term interest costs. Even small, regular overpayments can significantly reduce the mortgage term. Most lenders permit overpayments of up to 10% of the balance each year without penalty.
5. Choose an offset mortgage
Offset mortgages link savings to the mortgage balance, reducing the interest charged. FCA data show that there were 155,526 offset mortgages at the end of 2024, representing only 1.7% of all outstanding mortgages[3]. For households with consistent savings, however, this option can provide real value.
6. Review insurance policies
Mortgage protection, life insurance, and building cover are all essential, but premiums can differ significantly. Regularly reviewing policies helps ensure coverage stays appropriate without overpaying. Any savings made here can help alleviate pressure on household budgets.
7. Consider government support
The government offers schemes, such as Support for Mortgage Interest (SMI), which help individuals claiming certain benefits with their interest payments. In early 2023, around 12,000 households were receiving SMI loans[4]. Although limited in scope, this support can provide relief during difficult times.
8. Check for lender flexibility
Some lenders may allow borrowers to switch products mid-term, take temporary payment holidays, or extend repayment plans. Under the Mortgage Charter, lenders have committed to offering these options in specific situations, providing short-term relief[2].
9. Reduce other borrowing
Paying off unsecured debts, such as credit cards or personal loans, frees up income that can be redirected towards mortgage payments. Cutting this debt can also boost affordability assessments when remortgaging, expanding the range of available products.
10. Rent out a room
Renting out furnished accommodation in your home can generate extra income. Through the government’s Rent a Room Scheme, individuals can earn up to £7,500 per year tax-free (for the 2025/26 tax year) in this way[5]. This can significantly help to cover mortgage costs.
Managing payments strategically
There is no one-size-fits-all method to lower mortgage payments. Extending the term, switching products, or using schemes like offset mortgages each involve compromises. The key is to understand the options and select the approach that strikes a balance between immediate relief and long-term financial security.
Your home maybe repossessed if you do not keep up repayments on your mortgage.
Source data:
[1] ukfinance.org.uk/news-and-insight/press-release/half-new-first-time-buyer-mortgages-have-terms-over-30-years-quarter
[2] fca.org.uk/data/mortgage-charter-uptake
[3] fca.org.uk/freedom-information/information-offset-mortgages-july-2025
[4] commonslibrary.parliament.uk/research-briefings/sn06618/
[5] gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
