Over the last five years, homeowners may have found that their mortgage repayments have increased by more than they expected. Read on to find out why and steps you might be able to take to reduce your outgoings.

In response to high inflation, the Bank of England (BoE) increased the base interest rate between December 2021 and July 2023. As inflation stabilised, the interest rate has since been cut, but as of October, it was 4% – far above the 0.1% the BoE set in October 2021.

The BoE’s base rate has a direct effect on the cost of borrowing, including mortgage costs.

According to a This is Money article published in September 2025, mortgage repayments have increased by 47% in the last five years. In August 2025, the average monthly repayment reached a record high of £1,002.27, compared to just below £680 a month at the height of the pandemic.

If you’ve been paying a variable-rate mortgage over the last five years, your repayments are likely to have fluctuated during that time when the BoE changed the base rate.

Homeowners with a fixed-rate mortgage deal may have been shocked when they remortgaged. If they took out a competitive deal five years ago, their new mortgage rate could be more than double their old one. As a result, outgoings may have increased sharply.

The higher interest rate could add thousands of pounds to the cost of borrowing

At first glance, it might seem like there’s not much difference between the interest rates of 2020 and 2025. But as the rates are typically applied to large sums when taking out a mortgage, even a small change can lead to the cost of borrowing soaring.

Imagine you borrowed £200,000 through a repayment mortgage with a 25-year term in July 2020 with an interest rate of 1.72%. Your monthly repayment would be £820.

Now, you’re looking for the same mortgage in July 2025, and the interest rate is 4.28%. The repayment rises to £1,086.

Comparing the total cost of borrowing highlights how the additional amount adds up.

The mortgage with an interest rate of 1.72% would mean you’d pay just over £46,000 in interest over the full mortgage term. This rises to almost £125,829 for the mortgage with an interest rate of 4.28%.

3 ways you could reduce your mortgage repayments

If you find that your mortgage repayments are now higher and it’s placing your finances under pressure, there may be a way to reduce the burden.

1. Remortgage with a lower interest rate

Reviewing your current mortgage against the market could identify new deals that offer a lower interest rate than what you’re paying, particularly if you’ve been moved on to your lender’s standard variable rate.

A mortgage adviser can help you assess your options and identify lenders likely to accept your application.

You can typically lock in a new mortgage deal six months before your existing one ends.

You can search for and take out a new mortgage deal if you have an existing one in place. You’ll usually need to pay an early repayment charge, which might negate the gains you’d make if you secure a lower interest rate.

2. Extend your mortgage term

The length of your mortgage term affects your monthly repayments – a longer mortgage term will lead to lower repayments.

Let’s say you’ve borrowed £150,000 through a repayment mortgage and have been offered an interest rate of 4%. If you repay this over 15 years, your monthly repayment would be £1,109. If you extended the mortgage term to 25 years, this would fall to £791.

However, the drawback to extending your mortgage term is that you’ll pay more in interest overall. With the 25-year mortgage term, the interest paid would total £87,428, compared to £49,662 if you repaid the mortgage over 15 years.

Extending your mortgage term could improve your budget now, but a shorter mortgage term might be more beneficial when you consider your long-term finances.

3. Switch to an interest-only mortgage deal

If you’re struggling to meet your financial commitments with a repayment mortgage, you might want to switch to an interest-only deal.

As the name suggests, you’d only pay the accrued interest each month, so your repayments could fall drastically. However, as you won’t be repaying any of the outstanding balance, you’ll still owe the same amount when the mortgage deal ends.

As a temporary measure, an interest-only mortgage could help you better manage your finances.

If you don’t plan to switch back to a repayment mortgage in the future, it may be useful to set out a long-term plan for repaying the outstanding mortgage. For example, do you plan to downsize to repay the amount, or do you have other assets you could use?

Contact us to discuss your mortgage

If you’re interested in taking out a new mortgage deal or would like to understand how our mortgage advisers could help you, please get in touch.

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.