Flexible Rate Mortgages
What are flexible mortgages?
A Flexible Mortgage is a mortgage that fits around your lifestyle, you can vary your payments, you can overpay, underpay, stop paying,"payment holiday", for up to 6 months (with the Lender's agreement), or pay in a lump sum so you can pay the loan off early.
What are the benefits of over payments?
You should try to overpay each month as this will then give you the flexibility that the mortgage offers.
Also, by making overpayments each month you can pay the loan off early, which will save you a lot of money in interest payments, and there are usually no early repayment charges but check the small print.
How does this affect my interest rate?
The interest on a Flexible Mortgage is calculated each day and because of this any overpayments made are credited straight away, so you would benefit from this immediately.
What if I can't afford regular payments?
If for some reason you need to make underpayments for some months, due to other commitments, then most Lenders will only allow this if you have made overpayments in the past.
Again, if you have made regular overpayments then suddenly need to stop payments for a short while due to illness or having a baby etc, with the Lender's consent, this is called a "payment holiday" which can be as long as 6 months.
What are the downsides?
If you do this then be aware that your future payments might increase or the length of the mortgage could be prolonged.
What if I overpay, then need some cash in a hurry?
Its also possible under a Flexible Mortgage, if you have made regular overpayments, that you can borrow back an amount with the agreement of the Lender, up to a certain figure depending on the amount you have overpaid.
How complicated is this mortgage?
Its important to seek proper financial help as some of the mortgage packages offered are more flexible than others.
Please contact us for financial advice
If you are a regular saver then this is a good type of mortgage to have as you are encouraged to overpay each month as it offers you many different options.