The time may now be right to think about reducing your mortgage. As interest rates fall and the lenders become more flexible, many borrowers could take advantage by dramatically cutting the amount of money they will repay.

Most lenders will now allow flexibility - particularly in terms of varying the payments on your mortgage. In a time of falling interest rates this is probably among the most financially useful of all repayment options, if the borrower is not strapped for cash.

Mortgage interest rates are about the cheapest credit which it is normally possible to secure. However, because the loans are usually over a substantial amount of time the interest repaid is still often enormous - and that is true when interest rates are low as well as high.

With interest rates falling and demand deposit rates almost non-existent it makes little sense to put any additional money into a savings account. One of the best options is to reduce your mortgage. Even a small increase in repayments can make a substantial difference to not only the number of years you will be repaying the loan but also to the amount repaid in total.

For example, someone with a £100,000 mortgage being repaid over 25 years at Irish Permanent's variable rate of 5.89 per cent would have monthly repayments of £638. That total amount repaid over the term of the loans would be £191,400, almost double the amount borrowed. However, if repayments were increased to just £710 a month the term would be reduced by a whole five years and the total repaid would be £170,400. Indeed, for a repayment of £838 the term reduces to 15 years and the amount repaid to £150,840.

In other words for £200 a month you can reduce the number of years you will be repaying your mortgage by 10 years and will save £40,560, a not insubstantial sum.

But even smaller amounts can still pay off. Borrowers who simply maintain the same mortgage repayments and do not cut their repayments in line with recent cuts from the European Central Bank will see substantial savings. For example, a person now paying 5.89 per cent over 20 years will be making monthly repayments of £710. That rate is now likely to fall to £671 but still paying the old amount would cut the term by 17 months with a saving of £11,792.

If interest rates fall further the amounts to be saved simply add up. If, for example, mortgage rates were to fall to 4.89 per cent which many analysts think possible, the repayments would fall to £654. But maintaining your old repayment of £711 would mean two and half years less on the mortgage and a saving of £21,493.

Some lenders offer variations on this. First Active allows borrowers to withdraw overpayments of up to 5 per cent of the original home loan if they need the cash. They can also use the sum overpaid to fund payment breaks. However, if borrowers overpay by more than five per cent with a lump sum, it is capitalised to the mortgage and cannot be accessed again.

In addition, anyone with money on deposit which is attracting low interest rates can use the lump sum to reduce their mortgage. This is increasingly attractive at the moment for anyone unwilling to put their money into equities given the current market. After three years a lump sum of say £5,000 would reduce a £100,000 loan by around a year and a half.

All the calculations here are based on approximations and anyone considering changing their payment structure should first contact their lender and get a personalised calculation done.

In addition to reducing the interest paid by the borrower over the life of the loan, reducing the mortgage also increases the amount of equity the borrower owns in his home. As a result, if the home owner decides to sell, he has less to pay back.

Most of these options are available for those on variable rate loans and often a simple telephone call will suffice.

All rates correct at time of writing