How to Lower Your Mortgage Payment: 10 Proven Ways to Save Big
Did you know you could save up to $300 a month—or over $100,000 across your loan—just by adjusting your mortgage? Whether you're struggling with high payments or simply want to save more, learning how to lower your mortgage payment can make a huge difference in your financial life.
This guide breaks down the 10 most effective ways to reduce your mortgage payments—without complicated jargon or risky shortcuts. Whether you're a new homeowner or have had your mortgage for years, there's something here for you.
1. Refinance to a Lower Interest Rate
Refinancing means replacing your current mortgage with a new one—often with a lower interest rate.
How It Helps:
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Reduces monthly payment
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Saves tens of thousands over time
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Can also help shorten your loan term
Example:
Loan: $300,000
Old rate: 7.2% → New rate: 5.9%
Monthly savings: ~$250/month
Long-term savings: Over $80,000 in interest
Pro Tip: Shop around with at least 3 lenders. Even a 0.5% drop in interest rate can yield serious savings.
2. Extend Your Loan Term
Stretching your loan over more years reduces your monthly bill—even if the interest stays the same.
Example:
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$250,000 loan at 6.5%
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15-year term = $2,175/month
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30-year term = $1,580/month
That’s $595 less each month, though you’ll pay more interest overall.
Warning: Extending your term means more time in debt. Do this only if you need more breathing room.
3. Eliminate Private Mortgage Insurance (PMI)
If you put down less than 20% when buying, you probably pay PMI—a monthly fee to protect the lender.
Good news: You can cancel it once you reach 20% equity.
How:
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Ask your lender to remove it once your loan-to-value (LTV) ratio is 80%
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Sometimes requires a new appraisal
Savings: $100–$300/month, depending on your loan size.
Pro Tip: Check your mortgage statement—your PMI amount is listed separately.
4. Appeal Your Property Taxes
Your property tax bill affects your monthly mortgage payment if you escrow.
Here’s how to lower it:
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Review your property assessment
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Compare with similar homes nearby
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File an appeal with your local assessor’s office
Stat: About 1 in 5 homeowners who appeal their taxes win a reduction.
Pro Tip: Some jurisdictions offer online tools or annual appeal windows—don’t miss the deadline.
5. Make Extra Payments Toward the Principal
This strategy doesn't lower your current monthly payment, but it does reduce your total interest and shortens your loan.
Example:
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Add $100 to your payment monthly
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You could pay off a 30-year loan 5–7 years early
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Save tens of thousands in interest
Highlight: Make sure to instruct the lender to apply the extra to principal only.
6. Recast Your Mortgage
A lesser-known trick: mortgage recasting.
What is it?
You make a lump sum payment toward your loan and ask the lender to recalculate your monthly payments based on the new, lower balance.
Pros:
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Keeps your current interest rate
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Lower monthly payment
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Low or no fees
Example: Pay $25,000 toward a $275,000 mortgage, then recast. Your new monthly payment could drop by $150–$250.
Pro Tip: Not all lenders offer this. Ask your bank or credit union if it’s an option.
7. Rent Out a Room or Space
Turning part of your home into income can effectively cancel out some or all of your mortgage payment.
Options include:
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Renting a spare bedroom
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Airbnb/short-term rentals
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Renting out storage space or a garage
Stat: The average Airbnb host in the U.S. makes over $900/month. In Kenya, city hosts can earn Ksh. 30,000+ monthly from one room.
Pro Tip: Check local laws and HOA rules before renting.
8. Shop Around for Homeowners Insurance
Your insurance is often rolled into your mortgage payment. Paying less = lower monthly bill.
Steps:
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Get quotes from 3–5 insurers
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Ask about bundling with auto insurance
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Raise your deductible to lower premiums
Savings: Many homeowners save $400–$800 per year just by switching providers.
9. Look for Mortgage Assistance Programs
Depending on your income, profession, or location, you may qualify for:
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Mortgage relief programs
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Loan modification
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Temporary forbearance
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First-time homebuyer subsidies
In Kenya:
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Check with Kenya Mortgage Refinance Company (KMRC) for reduced-rate options
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Saccos and banks like KCB and Co-op Bank offer affordable loan products
Pro Tip: Don’t wait until you fall behind. Most programs work before you're in trouble.
10. Switch to Biweekly Payments
Instead of 12 monthly payments per year, pay half your payment every 2 weeks.
This results in 13 full payments per year instead of 12.
Benefit:
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Accelerates loan payoff
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Reduces total interest
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Can shave 4–6 years off your mortgage
Example: On a $300,000 loan, this could save $30,000–$50,000 in interest.
Pro Tip: Use a bank’s biweekly plan or do it manually—just ensure you’re consistent.
Summary Table: 10 Ways to Lower Your Mortgage Payment
| Strategy | Potential Savings | Difficulty |
|---|---|---|
| Refinance to lower rate | $100–$500/month | Moderate |
| Extend loan term | $200–$600/month | Easy |
| Cancel PMI | $100–$300/month | Easy |
| Appeal property taxes | Varies | Moderate |
| Extra principal payments | Long-term savings | Easy |
| Recast your loan | $150–$250/month | Easy |
| Rent out space | Up to full payment | Moderate |
| Shop for insurance | $30–$70/month | Easy |
| Mortgage assistance programs | Varies | Varies |
| Biweekly payments | Long-term savings | Easy |
Are You Paying Too Much on Your Mortgage?
Ask yourself:
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Has your interest rate gone down since you got your loan?
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Are you paying for PMI you could cancel?
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Are your property taxes too high?
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Could you use extra cash flow each month?
Even one or two changes could put thousands back in your pocket each year.
Affiliate Link: Use this Free Mortgage Comparison Tool to see how much you could save with refinancing or recasting.
Final Thoughts: Don’t Just Pay—Plan
Your mortgage is likely your biggest monthly expense. The good news? You don’t have to be stuck with it as-is.
With a little strategy and a few smart moves, you can slash your payments, speed up your payoff, and create more room in your budget for the things that matter most.
So—what would you do with an extra $200 or $300 a month?
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