How to Lower Monthly Payments on Mortgage?
You could be seeking to reduce your monthly payments on mortgage because of several reasons – you were over ambitious when buying your house, your financial situation has unfortunately worsened since you took your mortgage, or you are simply looking to lower your recurring household cost. There is no need to worry, as there are several options that you can explore to bring down your monthly mortgage expenditure.
Refinance Your Mortgage at Lower Interest Rate
This may not be the easiest way to lower the monthly payments on your mortgage, but it is certainly the most impactful in a low interest rate mortgage market, provided the switching costs like prepayment penalty of earlier mortgage and other fees are not exorbitant. While going for mortgage refinancing, you should make sure that the payback period of the refinancing costs is short, so that you can soon start reaping the benefits of the lowered monthly payments. Taking professional help when exercising this option is generally a good idea as there are many complex cost elements involved.
Extend Your Repayment Term
One of the simplest ways to reduce your monthly mortgage payments is by extending the duration of your mortgage term. Even though this way the overall cost of the mortgage over the entire tenure increases, your monthly financial pressure will be eased and you can feel more comfortable about your financial situation.
Consolidate Your Debts
If your total liabilities include debts from multiple sources like credit cards and other loans besides your mortgage, you can consider consolidating your debts by taking a first or second debt consolidation mortgage loan. This helps you in lowering the overall monthly repayments as credit card interest rates are usually very high compared to regular loans and mortgages. You can explore this option with the help of a debt consolidation consultant and see if it actually brings down your monthly payments.
Look for Lower Home Insurance Rates
Your monthly mortgage payment comprises of more than just the principal and interest liability – it also includes the tax and insurance payments. You cannot do much about the other components (unless you refinance the mortgage or extend your loan term), but you can look for lower home insurance rates to decrease your monthly commitment.
Downsize Your Home or Sublet
If the above measures are not sufficient or viable, you can consider moving to a smaller and more affordable house, and reduce your liability. This is of course the last recourse, but it is an important option, especially if you fear foreclosure owing to your financial situation.
You can also explore the option of subletting a part of your house for some period until you can afford to meet your mortgage commitments on your own. This way you will get some temporary relief and would not have to let go of the house.
Professional mortgage brokerage firms can be of great assistance in evaluating these options to lower your monthly payments on mortgage and can provide you expert advice for choosing the right course of action.