What Are Flexible Mortgages?
Hot Topics
- Types of Mortgage:
- Variable rates Mortgages: - mortgage payments are calculated by your lender on the so-called "Standard Variable Rate". This is based on the monetary "base rate" that is reviewed monthly by the Bank of England.
- Interest Rates Explained
- APR is used to identify the true cost of borrowing and to provide you with a method of comparing the true costs of a loan.
- How Is Interest Calculated On a Mortgage?
- Interest is charged in different ways depending on what kind of mortgage you have.
- How Do I Know If I Should Switch Mortgages?
- The mortgage market changes on a regular basis – and it is quite possible that just a few years after taking out your mortgage there will be plenty of better deals out there with more favourable interest rates.
- Base Rate Tracker Mortgage
- A base rate tracker mortgage tracks the Bank Of England’s base interest rate then adds on a additional figure to arrive at the borrowers variable rate. Your monthly mortgage interest payments go up when the base rate goes up and they go down when the base rate goes down. The base rate tracker interest rate is usually between 0.5% and 1.0% above the Bank Of England's Base Rate.
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.
1st Time Buyer - Buy to Let Mortgages - Capped Rate Mortgages - Discount Mortgages - Fixed Rate Mortgages - Flexible Mortgages - ISA Mortgages - Low Setup Cost Mortgages - Self Cert Mortgages - Tracker Mortgages - 100% Mortgages Cashback Mortgages - Adverse Credit - Buy to Let - Commercial Mortgages - Company Directors - Equity Release - Fixed Rate Mortgages - Income Multiples - Interest Rates Explained - Mortgage Glossary - Mortgages Explained - Previously Declined - Refinance Mortgages - Repaying Mortgages - Right to Buy Mortgages - Self Employed - Unusual Properties - Variable Rate Mortgages