How do I reduce my monthly mortgage payments?

Rana Mortgage Adviser

This comes up in almost every client conversation. Whether you are on a residential mortgage or a buy-to-let, there are more levers you can pull than most people realise. Here is a proper breakdown.

If it’s your home

You might be overpaying your lender.

If your deal has ended and you have not switched, you are likely sitting on the standard variable rate (SVR). That is typically 7 to 8% right now. A 2-year fixed rate deal sits around 4 to 4.5% (based on market rates as at June 2026). On a £300,000 mortgage, that gap could cost you £400 to £500 every single month. That is a holiday. Or two.

Assumptions: £300,000 repayment mortgage, 25-year remaining term. Monthly payment at SVR 7.0% = approx. £2,120; at 2-year fixed rate 4.5% = approx. £1,667. Difference = approx. £453/month. SVR and fixed rate figures based on market averages as at June 2026. Individual rates and payments will vary.

Buy yourself more time.

Extending your term from 20 to 25 years on a £250,000 mortgage at 4.5% drops your monthly payment by around £190. Yes, you pay more interest overall. But sometimes cashflow now matters more than the maths over 25 years.

Interest-only: the option people never ask about.

You pay just the interest, not the capital. Monthly payment drops significantly. While lenders typically apply stringent eligibility requirements and require a robust repayment plan, this option may be worth considering if cash flow is limited.

Can’t go fully interest-only? Go half and half.

Some lenders let you split: part repayment, part interest-only. Lower payments than full repayment, and you are still chipping away at the debt. Best of both.

Your savings might be working against you.

If your savings rate is lower than your mortgage rate (for example, earning 3% AER on savings while paying 4.5% APR on your mortgage), you are effectively paying a net cost of approximately 1.5% per year on money held in savings rather than used to reduce your mortgage. A lump sum overpayment could save you more in interest than those savings will ever earn. Just check for early repayment charges before you do anything.

The small overpayment trick most people ignore.

Many lenders let you overpay up to 10% of your balance per year without any penalty. Here is what an extra £100 or £200 a month could do on a £250,000 mortgage at 4.5% over 25 years (illustrative example):

Assumptions: £250,000 repayment mortgage, 4.5% annual interest rate, 25-year remaining term, overpayment applied monthly from month one, no product changes during the term. Calculated using standard mortgage amortisation. Figures are illustrative and will vary based on individual circumstances.

An extra £100 a month could save you £14,000 in interest and three years of payments. Worth knowing.

If it’s a buy-to-let

Here is the one most landlords miss.

Paying a higher arrangement fee to secure a lower rate does not always cost more over the product term. But it does improve your monthly cashflow, and cashflow is one of the most important considerations for landlords.

Here is what that looks like on a £300,000 interest-only BTL (illustrative example):

Assumptions: £300,000 interest-only BTL mortgage, 2-year product term. Monthly payment calculated as (annual rate / 12) x loan amount. Total cost = (monthly payment x 24) + arrangement fee. Figures are illustrative and will vary based on individual circumstances.

Same total cost. But Product B puts an extra £125 in your pocket every single month. Across five properties, that is £625 a month in additional cashflow, without spending a penny more overall.

Never judge a BTL product on the headline rate alone. Always run the full two-year cost before you decide.