1. Remortgage with Existing Lender
Most mortgages offer an introductory offer with a better rate of interest. When this introductory rate end you will revert to the Standard Variable Interest rate. As soon as this happens it is worth ringing up your mortgage lender and asking what options there are. The advantage of remortgaging with your existing lender is that usually you will be pre-qualified. This is useful if your income is hard to prove.
2. Search Range of Remortgage Quotes
After checking out your existing mortgage lender, look through other mortgage dealers. If you get an improved interest rate on your mortgage, it creates an opportunity to payback a bigger % of your capital debt. For example, instead of choosing lower mortgage payments. You could pay the same but just pay more capital back each month.
3. Current Account Mortgage
A current account, or offset mortgage, works by using your bank savings, to automatically reduce your mortgage debt. For example, if you have £5,000 in your current account, this can be automatically used to reduce your mortgage debt. Usually these types of mortgage involve combining your current account with your mortgage. They are increasingly popular.
4. Flexible Mortgage
A flexible mortgage enables you to pay off your mortgage debt early, through making extra payments. If you are able to make extra payments to your mortgage you save in two ways. Firstly, the capital is automatically reduced; secondly you save future interest payments. The more you can pay off in the beginning of your mortgage term, the more you will benefit from reducing your debt and future interest payments.
5. Mortgage Cycling
This is a complicated way to reduce your mortgage debt, through recycling your mortgage loans. It involves making extra payments, and if necessary borrowing from other sources to be able to pay these extra repayments. It require careful thought, as it is risky.