Title:
Flexible Mortgage
UK – Mortgages to Specially Suit the Self-employed
Word Count:
677
Summary:
The dissimilar
nature of revenue structure of self-employed people warrants the use of
flexible mortgages. Flexible mortgage is called thus because of the
flexibilities that it offers. A flexible mortgage differs from the regular
mortgages because of the terms on which it is offered. In flexible mortgage,
the borrower has the option to pay as and when he wants to pay in whatever
amount. Similarly, interest is calculated on a daily basis rather than on a
monthly or annual basis.
Keywords:
Best mortgage uk,
best uk mortgage rate, best fixed rate mortgage uk, mortgage advice
Article Body:
While a person
drawing a fixed salary every month finds it easy to repay loan in fixed monthly
instalments, those with a fluctuating income will find it otherwise. In order
to tap the potential of the latter group, which principally consists of self
employed people and people whose income is largely contributed by commissions,
flexible mortgages have cropped up.
A fluctuating income makes the case of these people inappropriate for regular
mortgages because of two reasons. Firstly, lenders would not prefer a borrower
with fluctuating income. Secondly, the borrower with such an income structure
would himself find it difficult to make timely payments.
Flexible repayments, payment as and when you like, and the option to repay the
whole of the loan at the time you want, are some of the qualities that flexible
mortgages in the UK are characterised with.
Before you perceive this as the ultimate freedom, let us remind you that not
all good things come for free. This aptly holds in case of flexible mortgages.
The rate of interest charged on flexible mortgages is higher than the interest
charged on the regular mortgages.
In spite of a higher rate of interest, the popularity of flexible mortgages in
the UK sees no decline. Until the time an alternative to flexible mortgage
comes, self-employed people will continue using it. The advantages of flexible
mortgages have overshadowed its drawbacks.
Flexibility of repayments forms one of the most important advantages of
flexible mortgages. As against the traditional mortgages where borrowers are
required to pay a fixed instalment every month, flexible mortgages are easy on
repayment rules. Consequently, in a month when the resources are not enough or
when the borrower is incapable to make repayments at the normal rate because of
loss, lesser repayments will be required. Similarly, when the borrower is in
the capacity to pay more than what is required, he can make an overpayment.
Paying less also means paying nothing. This is actually true though hard to
believe. Payment holidays form one of the prime attractions of flexible
mortgages. During a payment holiday the borrowers gets exemption from making
payments altogether. The exemptions will
depend on the borrowers regularity in the previous months and if sufficient
balance of the loan has been overpaid.
Next in the list of advantages, is the facility to draw as many times from the
amount paid. Thus, <a href =
"http://www.easymortgageuk.co.uk/flexible_mortgage.html">Flexible
mortgages </a> have the provision to allow borrowers to draw from the
amount that they have already paid. This again requires the borrower to have
made enough repayments before the use of this facility is made. While this
creates a constant source of funds for the borrowers, it also increases the
length of period for which the mortgage will continue and the interest
burden.
Since there is a constant change in the balance that is remaining to be paid,
charging interest annually or monthly would be costlier for the borrower. The
third advantage of flexible mortgage deals with an ingenious way to lessen the
interest burden. Interest in flexible mortgages is calculated daily. The daily
calculation of interest ensures that periods in which the balance unpaid is
less because of overpayment does not lose on the interest.
The list of advantages does not end here. Premature settlement of accounts is a
facility that is singly available in flexible mortgages. Unless otherwise
stated, mortgagees will charge a premature payment penalty. Flexible mortgages,
on the other hand, allow borrowers to repay the mortgage before it is due
without any penalties. A borrower who wants to escape the high interest rate
will find this clause in their favour. A loan taken to meet an occasional
deficit in finance will be paid as soon as the borrower receives the necessary
resources.
Depending on the credit status a borrower enjoys, he will get flexible
mortgages accordingly. The application procedure of the flexible mortgage is
very similar to the regular loans and mortgages. Online applications and online
processing helps in accelerating the pace of approval of flexible mortgages.