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What are flexible mortgages?

Flexible mortgages are just that – flexible. They allow you to make overpayments, underpayments, lump sum payments, take payment breaks, borrow back overpayments, are transportable, calculate interest daily and most don’t charge early repayment charges (ERCs).

Are there various kinds of flexible mortgages?

Current account mortgages and offset mortgages are both kinds of flexible mortgage. A current account mortgage links your current account with your mortgage account. Interest is determined on a day-to-day basis to ensure that you gain by reducing your outstanding debt briefly each time your salary get paid into it – i.e. less interest accrues on your mortgage when you’ve more cash in your current account.

Offset mortgages are similar to current account mortgages but they combine any savings accounts you have and can also consolidate credit card debt and {personal} loans along with your mortgage.

Lots of mortgages these days though have degrees of flexibility. They might enable you to make {over} {payments} {of a} set amount each month. This could be either a flat amount of perhaps, as much as £500, or a set portion, say 10% of the outstanding loan.

What are the pluses and minuses of flexible mortgages?

By making regular over payments you decrease both the timeframe of your mortgage and also the level of interest you have to pay on it. In case you receive bonuses in your occupation you might welcome the ability of being able to make lump sum repayments in case you wish to.

If the need arises you have the ability to make under payments or take payment breaks without going behind in your payments and getting into trouble with your loan provider.

You’ll also be able to make a one-off withdrawal or borrow back. Some lenders only allow you to borrow back any overpayments you have made but others will permit you to borrow back the total amount of your original loan. This feature can be fantastic if you perhaps want to make home improvements as the rate you pay on your mortgage will be lower than the rate you would get for a personal loan.

Some of the benefits of a flexible mortgage can also be the negatives. If you know you have the capability to continuously borrow back money and you are not really disciplined you could wind up stretching the term of the mortgage or never paying back any capital, and even wind up owing more than you did in the first place.

If you would like to learn a lot more about flexible mortgages then talk to a professional mortgage consultant who will help you determine whether it would be a good alternative for you personally.