Title:
Flexible Mortgage
Guide
Word Count:
483
Summary:
In today’s
ever-changing world, people need more and more flexibility when it comes to
borrowing and mortgages. With this in mind, more and more lenders are offering
what they term as ‘flexible’ mortgages. However, the term ‘flexible’ can mean a
lot of different things.
Keywords:
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Article Body:
In today’s
ever-changing world, people need more and more flexibility when it comes to
borrowing and mortgages. With this in mind, more and more lenders are offering
what they term as ‘flexible’ mortgages. However, the term ‘flexible’ can mean a
lot of different things. If you are unsure about which mortgages are flexible
and what the benefits of a flexible mortgage are, then this article might be
helpful to you.
What does flexible mean?
Although there are a lot of mortgages that claim to be flexible, there are some
things that define a truly flexible mortgage. There are four main
characteristics you should look for when determining if a mortgage is flexible.
These are:
· Being allowed to overpay
· Being allowed to underpay
· Being able to take payment
holidays
· Interest is calculated daily
Overpayments
One of the best features of flexible mortgages is the ability to overpay. With
traditional fixed repayment mortgages, there is no easy way for you to pay more
than your fixed repayment each month. If you have a flexible mortgage, then you
will have the ability to pay as much as you can each month. This means that
during the good months you can speed up the process of paying your mortgage
back. If you regularly overpay then you can save yourself thousands of pounds
in interest payments.
Underpayments
Underpayments are another useful feature of flexible mortgages, but they should
be used sparingly. If you are unable to make the repayment in a given month,
then you can just pay as much as you can, effectively underpaying on your
mortgage. Although this is good as it stops you from defaulting, there are
penalties involved. The more you underpay, the longer the mortgage will last or
the higher your repayments afterwards will be.
Payment holidays
Payment holidays are similar to underpayments, but they let you completely halt
payment for a period of time. Although this might sound appealing, there are
usually restrictions. Lenders will not let you take a payment holiday unless
you have overpaid in the past, and after your holiday you will have to overpay
again to get the repayments back on schedule. However, payment holidays are
useful for people who are self employed or who want to take a break from work
for personal reasons.
Other benefits
Another benefit of flexible mortgages is the ability to borrow back money from
your mortgage. If you have overpaid in the past but are now in need of extra
cash to fund home improvements or some other purchase, then you can borrow the
money back that you have overpaid. Although you will be changing your mortgage
terms again, getting a loan at the rate of your mortgage is the lowest personal
loan rate you can possibly get.
If having flexibility and the chance to overpay and underpay is important to you,
then you should definitely opt for a flexible mortgage.