Flexible
mortgage
A flexible
mortgage is
designed to
give you
more control
over your
finances
with varying
degrees of
flexibility
- you should
be able to
overpay,
borrow back
overpayments,
underpay and
take payment
holidays
when you
make a
payment,
plus as soon
as you make
a mortgage
payment you
start paying
interest on
a smaller
loan amount.
What are the
benefits of
a flexible
mortgage?
Flexible
mortgages
are
specially
designed to
accommodate
the changes
taking place
in our
working
environment
and
lifestyles.
Some
flexible
mortgages
allow you to
take payment
'holidays'
where you
can choose
not to make
monthly
payments for
up to six
months. This
is
particularly
useful for
couples
starting a
family, or
people
taking time
out to
study.
However you
will have to
agree
payment
holidays
with your
lender as
taking time
off could
either
increase
your
repayments
later on or
prolong your
loan period.
The best
thing you
can do with
a flexible
mortgage is
make
overpayments.
This will
allow you to
pay off your
mortgage
early and
potentially
save many
thousands of
pounds in
interest
payments.
But the
beauty of a
flexible
mortgage is
that it then
allows you
to borrow
back those
overpayments
if you need
to, or you
could decide
to stop
paying your
mortgage for
a month or
two, maybe
when
expenditure
is at a
peak. To be
really
flexible, a
mortgage
should allow
you to leave
it without
paying an
Early
Repayment
Charge (ERC),
but as many
flexible
mortgages
these days
come as
fixed rates
or with
discounts,
this is not
always the
case.
Finally, it
is important
that
interest is
calculated
daily, so
that any
overpayment
is taken off
your
mortgage as
soon as you
pay it.
While some
lenders
advertise
fully
flexible
mortgages,
thousands of
other
mortgage
deals come
with
flexible
features
these days;
the most
common being
the facility
to overpay.
Some will
only allow
you to
overpay a
maximum
figure per
month (eg
£500), while
some will
let you pay
off a
maximum
percentage
of the
mortgage
amount per
year (eg
10%).
Pros and
Cons of
Flexible
Mortgages
Flexible
mortgages
put you in
charge of
your
finances,
and offer
the
potential to
save a huge
amount of
money if
used
properly.
They can be
ideal for
anyone with
a
fluctuating
income, such
as the
self-employed,
or people
who work on
commission.
Flexible
mortgages
are not
always the
offered at
the lowest
interest
rates; you
may have to
pay a slight
premium for
maximum
flexibility.
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