What is a flexible mortgage?
Flexible mortgages differ from standard repayment mortgages in that it offers the ability for the borrower to overpay, underpay and take payment holidays on the regular repayments required by the mortgage agreement, subject to conditions.
Who can use flexible mortgages?
The majority of people eligible for standard repayment mortgages may also find a flexible mortgage useful. A flexible mortgage can help significantly for those with irregular, uncertain or tight finances. Flexible mortgages are also good for those with more stable finances who want to pay off their mortgage at a faster rate.
Why are the benefits of flexible mortgages?
The benefits of a flexible mortgage will depend on your financial situation. A flexible mortgage will allow those with excess cash to repay their mortgage at a faster rate. Regular overpayments at the start of a mortgage’s life can significantly shorten the overall lending period and save a significant amount on interest payments over the lifetime of the mortgage.
For those whose finances are tighter or worry about dips in their income due to unemployment or otherwise, a flexible mortgage allows underpayment or even payment holidays on the otherwise regular repayments, subject to the conditions of the lender. This can provide crucial leeway during difficult times, allowing you to manage your mortgage effectively without running into arrears.
What are the disadvantages of flexible mortgages?
Due to the lesser restrictions on repayments, flexible mortgages often have higher average interest rates than some of their counterparts. This can be countered through the use of other schemes in combination with flexible mortgages, such as searching for packages that combine flexible mortgages with discount rates.
How much do flexible mortgages cost?
Flexible mortgages cost exactly the same as any other type of mortgage, with the exception of interest rates. Fees and charges in the mortgage agreement will differ from provider to provider, and it is always worth being sure of all small print and conditions before deciding on a final deal.
What’s the best flexible mortgage product?
Choosing the best flexible mortgage product is something only you can do. In addition to all the other factors that must be taken into account with a standard mortgage, there are a number of specific areas which flexible mortgages could be judged on. Most of these revolve around the terms and conditions surrounding the additional options offered by a flexible mortgage. Overpayment, underpayment and payment holiday options usually come in a variety of different forms. Payment holidays for example are in some cases earned and in others come as a standard option. Asking the lender what these terms and conditions can throw up many important facts about just how flexible the mortgage is.
It can also be worth looking for the various mortgages that include features from other products, such as offset or tracker mortgages. Despite the potential for horrendously complex names such as a Capped Offset Flexible Base Rate Tracker mortgage, once the different terms are understood they can reveal a mortgage that can offer substantially more security and features than other competing products.
Who provides flexible mortgages?
The primary providers of flexible mortgages are banks, building societies and specialist mortgage companies. They can either be dealt with directly or through a network of brokers, agents and intermediaries who relay a variety of products from across the industry.
Independent Financial Advisers (IFAs), with specialists in the mortgage industry sometimes referred to as independent mortgage brokers, are legally required to be both impartial and unbiased.
They can have no affiliations or tie-ins with mortgage providers, and you can also request payment on flat fee rather than commission basis. They can offer advice on any mortgage product available in the market unlike other sources who are usually limited to an affiliated group of products.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.