The more money you have, the easier it is to free yourself from mortgage debt. But there are some ways that homeowners on a tight budget can keep their interest repayments under control or even shave years off their mortgage without having to make any overpayments, writes Laura Slattery

1. Avoid spending too long in fixed rates

Fixed rates offer security to first-time buyers and the market is currently quite competitive. But the price of that security for people who opt for longer fixes is a rate of interest that often ends up being higher than the standard variable rate.

Penalties may also apply if homeowners make early repayments on the mortgage or convert to a variable interest rate in the middle of the term, so it is important to examine the terms of the contract before signing up for a fixed-rate product.

2. Avoid payment holidays and deferred starts

If you take a break from your mortgage without building up overpayments first, the deferred interest will be added on to the loan at the end of the holiday period. The repayment will increase so that the loan is repaid within the remaining term. This gives homeowners less scope to boost repayments later.

The same principle applies to low or deferred starts to mortgages, where first-time buyers are paying interest on the full amount of the loan, without chipping away at the principal sum borrowed.

3. Investigate First Active's current account mortgage

With current account mortgages, customers benefit immediately from the crediting of money such as their salary, as interest is calculated on a daily basis. Any money left in the account at the end of the month is classed as an overpayment, reducing the balance of the mortgage automatically.

"Potential nightmare stuff" is how one adviser describes the product but financially mature people could find it a useful way to shorten their mortgage term, provided they have the discipline not to avail of the pre-approved overdraft facility.

4. Remortgage wisely

Even a quarter of a percentage point in the rate of interest can make a massive difference to the total cost of a mortgage, so it could be worth switching to a more competitive lender. The process costs between €900 and 1,500 by the time you're finished paying solicitors' fees, surveyors' costs and other charges, so you will need to calculate if the savings are worth it. There is always an element of guesswork involved: your new lender might not always remain so competitive, while your ex-lender could clean up its act.

5. Avoid prolonging the pain through equity release

If words such as "negative equity" and "repossession" make you shake uncontrollably from fear, then do your best to ignore the temptation of mortgage top-ups, debt consolidation loans and equity release schemes.

These products are designed to make it easier for established homeowners to borrow more against the value of their homes, but they also rack up profits for lenders at a time when homeowners should ideally be worrying about boosting their pension, not paying off high mortgages.