1) Look at remortgaging.
Sometimes it works out cheaper, sometimes it does not. But if you look around for a different mortgage provider you might find one that is a little bit cheaper than your current mortgage provider. However, for this to work you need to assess all the costs and charges associated with a remortgage and make sure that there is a saving.
Once you find a product that is cheaper, ask your potential new bank for quotes on shorter term mortgages, until the monthly repayment is back up to what you are paying now. They might help you reduce the term by a few years.
2) Make extra payments.
Your lender might allow you to make additional extra payments when you have a little bit of spare cash. Many insist on a minimum amount of the extra payment, so set up a separate savings account and every month make a small payment into that. Once the account balance exceeds what your bank will accept as a lump sum payment against the mortgage, withdraw the money and use it to pay off some of the mortgage.
When you do this, ask your lender to recalculate your mortgage based on the same monthly repayments. If they will not do this, then however much your monthly repayments drop by should also be added to the savings account ready for the next lump sum payment.
3) Don’t add to the loan.
It is tempting to add to the mortgage in order to buy a new kitchen, afford a special holiday and so on, but this is just making the situation worse and it will then take you longer to pay off the mortgage. Instead, delay that brand new kitchen and put money aside each month to pay for it. This money is earning interest and building up quickly, whereas a loan is costing you interest and eating into your finances.
4) Start a part time job.
It doesn’t have to be much, but if you create a blog or two and start blogging, then you can quickly start earning a little extra cash from home. Just by spending a few hours per week in the evenings, or whenever best suits you, you could potentially start earning a few hundred per month. As this money builds up this can be used to pay off a chunk of your mortgage. Again, make sure that your lender recalculates your loan based on the existing monthly premiums.
5) Watch those extras.
If you are remortgaging your bank might offer to add the fees to the mortgage, but this will cost a lot of interest in the long term. It is much better to pay these fees as cash. Also, review your insurance policies connected to the mortgage. If you have redundancy cover, for example, and you count your job as ultra secure or you are self employer and not eligible for such cover, you might prefer to drop the insurance.
By John Benson