Flexible Mortgage
It can be difficult to define a flexible mortgage at times as each lender’s flexible products will differ. They do have common features however and in order to be classed as ‘flexible’ it must incorporate the following three features.
- Interest must be calculated on a daily basis
- It must contain the facility to make overpayments at any time without incurring a penalty, and to underpay if the borrowers circumstances warrant it
- The facility to take a payment holiday if circumstances warrant it
Many flexible mortgages offer far more than these three basic features. To give an example, it is not uncommon for the borrower to be provided with a chequebook to take advantage of a drawdown facility. This enables additional amounts to be borrowed and debited to the mortgage account as further advances.
Flexible mortgages allow individuals to take a greater control over their finances. Borrowers are able to reduce the term of their mortgage by making regular overpayments or paying in lump sums. Paying off the mortgage early can potentially save thousands of pounds in interest payments.
On the flip side, by making underpayments and taking payments holidays; the overall amount that is owed will increase. In this case, the mortgage repayments will be re-calculated to ensure that the mortgage is still repaid in full by the end of the term.
By not taking advantage of the features that flexible mortgages offer means that there is little point in having one as the interest rates are less competitive than those of other products. Most flexible mortgages have variable rates, with some now having initial fixed or discounted rates also.
Flexible mortgages tend to suit people:
- On a variable income such as those who get a monthly or quarterly bonus and can make overpayments,
- Self employed people, again with a varied income who can underpay on occasions where cash flow is tight.
- For those who require the flexibility should they decide to go travelling, start a family and so on.
Self Certified Mortgage | Non Status Mortgage | Fixed Rate Mortgage | Discounted Rate Mortgage | Capped Rate Mortgage | Tracker Mortgage | Flexible Mortgage