Last Updated on February 17, 2021 by Melissa S.
When you’re trying to cut back on spending, you’ll hear a lot of advice about cutting out luxuries like your morning coffee or eating out regularly and you might look at ways of reducing household bills a bit. But those things aren’t your biggest expenses and a lot of people find that, even if they get rid of all of the unnecessary spending from their budget, they’re still struggling to make ends meet. That might be because you’re spending too much on the big things, like mortgage payments. A lot of people are overspending on their mortgage payments without even realizing it and it causes them financial trouble, but it doesn’t have to be that way. If you think that your mortgage payments might be too high, here are some things that you can do to reduce them.
Downsize Your House
A lot of people are spending too much on their mortgage payments because their home is simply too big. When you go to a mortgage provider, you should go in with an idea of the size of house that you need and what it’s likely to cost, and then borrow that amount. However, it often goes the other way and people will borrow the maximum amount that they’re eligible for and then choose the house based on that. If you’re a family with two kids, then you ideally need a house with 3 or more bedrooms. But if you’re living alone or you’re with a partner but you don’t have any kids, you should be looking for something like a 1 bedroom condo for sale instead. Think about what space you actually need and don’t spend money on mortgage payments for a house that is far too big. If you think that you may have made a mistake and your house is too big for your needs, you should seriously consider downsizing.
Overpay When You Can
Interest rates are low right now, so it’s a great time to pay off as much as you can before they increase again. Overpaying on your mortgage doesn’t seem like a sensible way to cut your monthly costs and it isn’t when you’re struggling for money. But if your finances are in a good position, you should try to pay extra if possible. That will reduce the mortgage faster and it means that in future, if you are in financial trouble, the burden of your mortgage is less. Just be aware that some mortgages have fees for early repayment so you won’t actually be saving money. Make sure that you check that you aren’t going to get charged for overpaying before you start doing it.
If you put down a deposit of less than 20 percent, you may have been sold private mortgage insurance. But once you’ve paid off 20 percent of your mortgage, you can drop that insurance. The thing is, the lenders aren’t going to tell you that because it’s costing you thousands on top of your mortgage every year and they want you to keep paying it. It’s worth checking your statements and speaking to your mortgage provider to see if you can cancel that insurance, it’ll save you a lot of money each month.
Increase Your Payment Period
The faster you try to pay your mortgage off, the more you’ll pay back each month. You don’t want to be saddled with a mortgage for the rest of your life so paying it back as quickly as possible is a sensible idea, as long as you can actually afford it. But if you’re struggling to cover the monthly repayments, you could consider increasing the payment period. The majority of mortgage deals will allow you to do this and there’s no downside really because you can still overpay if you need to. That means your monthly payment is reduced if you need it to be, but when things are going better for you, you can resume paying it off at the original rate.
Switch To A Cheaper Lender
Mortgage deals are changing all of the time and if you took out the mortgage a long time ago, there’s every chance that you’re not getting the best possible deal. So many people don’t keep up to date with the current mortgage deals so they miss out on better deals. It’s a good idea to shop around and consider remortgaging to get a cheaper deal.
Most people think that there isn’t really much that they can do about their mortgage payments and they just have to deal with them, but that isn’t true. These are all great ways that you could save yourself a lot of money.