What Are Flexible Mortgages?
Hot Topics
- How Much Can I Afford?
- You have to be very careful when buying a house to be sure that you will be able to afford the monthly mortgage repayments – as you risk losing your home completely if you find you simply cannot afford it.
- What Is Conveyancing?
- Conveyancing is the name of the legal process of transferring ownership from the seller to the buyer.
- What Happens If Interest Rates Change?
- If you have some form of fixed interest rate mortgage you will be unaffected by changes in interest rates. Otherwise you can expect a change in the rate of interest charged on your mortgage.
- What are 100% Mortgages?
- Most mortgage lenders will only offer a 90% loan to value, that means that they will only loan you 90% of the properties value. First time buyers find this particularly problematic because they need to save up there 10% of the properties value before they can complete on their mortgage.
- What Happens If I Have Bank Defaults?
- If you have failed to meet payments on a credit agreement such as secured loans, unsecured/personal loans, credit cards, store cards or car finances etc, or you have failed to comply with your lender’s requirements, you will be described as having 'defaulted'.
Generally, people rebroke their mortgage deal once every five or six years. They also may change their mortgage lender at the end of a discounted or fixed period. Chances are in that in the time between their last remortgage, the mortgage market will have changed a great deal.
Today’s mortgage market is also a great deal more competitive than ever before. Remortgaging is in vogue because borrowers have begun to realise that they could change their lender if they wanted to. This has allowed a ‘Bargin hunter’ mentality within the uk mortgage market with borrowers looking for the ‘best offer’ at every opportunity. In recent years many new types of mortgage and many new variations on existing types have released in to the market place the most prominent addition in recent years to the mortgage market was the flexible mortgage.
What makes a mortgage a ‘flexible’ mortgage, with so many products available how do can you recognise a flexible mortgage?
Overpaying
The defining benefit of a flexible mortgage is the ability to overpay your loan back faster than the normal repayments would allow. This benefit can save you a lot of money as you can reduce your interest charges on the loan. You should be allowed to overpay at any time, and any amount, and by lump sum or regularly. This helps to reduce the total interest owing, and you can pay the loan off early.
Interest Charges
On a flexible mortgage, interest should be calculated daily. This will allow you to get the maximum overpayment benefit immediately rather than having to wait for a for the interest to be calculated annually.
Underpaying
A truly flexible mortgage will allow you to underpay if you need to, usually this benefit is only allowed after you have overpaid enough to cover the difference between your normal payment and your underpayment.
Payment Holidays
You should be able to take a payment holiday, maybe for a couple of months or over Christmas. usually this benefit is only allowed after you have overpaid enough to cover the difference between your normal payment and your underpayment.
No Redemption fees
A flexible mortgages should not have redemption fees at any time, so you are free to pay off large chunks of your mortgage or move on without penalty.
Reborrowing
Finally, you should be able to borrow back money that you have overpaid should you need to.
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