Flexible Mortgage

Mortgages products have evolved over the past few years and as such the mortgage market is able to offer a wider variety of products. One of the most recent types of mortgage to become available is the Flexible Mortgage. This type of mortgage provides you with a choice of how to make your mortgage payments.

The key points of a flexible mortgage are that they provide you with the flexibility of payments. You have the ability to make overpayments on top of your agreed monthly mortgage repayment. Although, the lender might impose a limit on how much you can overpay by per month. This type of mortgage works particularly well for people who work in an environment that pays monthly or annual bonuses. If you fall into this category, you can use these one off lump sums to make overpayments to your mortgage. You can also take payment holidays, which is where you can effectively miss your monthly mortgage payments. You also benefit from this if you are self-employed as your workload could fluctuate and you therefore have the option of making overpayments when business is good and taking skipping monthly payments when work isn’t so strong.

The other major factor with a flexible mortgage is the interest rate, whichever interest rate option you choose, the lender will charge interest on a daily basis rather then annually. Therefore, you should see the balance of your mortgage loan decreasing on a daily basis as the interest is calculated on the balance outstanding. Most lenders can offer fixed, variable and discounted rate options on flexible mortgages. It’s down to personal choice upon which interest rate option is right for you. When you have agreed on which flexible mortgage product is right for you, most lenders won’t charge you an arrangement fee for this type of mortgage, although it does depend on lender.

When using the flexible mortgage facility of making overpayments and lump sum payments, there should be no penalties incurred for doing so. Lenders might set maximum limits on how much you can overpay by per month and they may also say that lump sum payments are restricted to a certain amount; however, this again depends on each lenders agreement. If you utilise the service of making monthly overpayments or a one off lump sum, this will reduce your overall mortgage balance. Therefore, you are decreasing the amount of mortgage you owe to the lender and will make the term of the mortgage lower.

If you are making regular overpayments, you can also have the option of borrowing back these funds if required. Using this method can also be seen as a way of saving, not only are you reducing the loan balance but you are also building up a reserve of savings. These can be borrowed back at any time and you are effectively borrowing back from yourself. You are encouraged to make overpayments in order for you to use this service. However, each lender stipulates various guidelines with regards to this method and it’s best to check with individual lenders regarding their rules on this.

When considering a Flexible Mortgage, it’s worth researching various lenders products. Differing lenders are able to compete against each other for business by offering lower interest rates and various repayment options. Therefore, as a rule, it can be beneficial to meet with your existing lender to discuss your options before making a final decision. You may feel that you need to speak with an independent financial advisor who will be able to give you impartial advice about the relevant deals that are best suitable for your needs.

Flexible mortgages work in the same way as standard mortgage products; they act as a secured loan against your property. If you fail to repay the agreed mortgage repayments, the lender can have the right to seize your property in order for them to recoup their losses. The Flexible Mortgage product is an innovative one which offers lots of options to you. As long as you utilise these options, you can benefit from a range of ideas that are open to you.