Flexible Mortgages
The Flexible Mortgage allows you some interest in options, the ability to overpay or underpay the monthly premium is one of the major advantages. The flexible mortgage was known as the Australian Mortgage in the early 1990’s and the plan was introduced into the UK mortgage market in 1995. Most flexible mortgages are configured over terms of typically 2 years
The benefits of overpayment
By overpaying your mortgage you may find yourself satisfying your mortgage much earlier and this means you will save on interest charges.
Because interest on a flexible mortgage is calculated daily, the money is deducted from your mortgage debt immediately. You can overpay from month to month, or you can pay lump sums. whatever your choice you start paying interest on a lesser amount immediately, which could mean outstanding savings in future interest payments.
You can also use your overpayments to tide you over in times of financial difficulties, If you don't have the funds at the time and you have consistently made overpayments you could find your self entitled to have a mortgage holiday. If there are not enough funds you may be able to make underpayments to see you through hard times. Of course borrowers can face large penalty charges for additional capital repayments or if payments were overdue.
You may also borrow more money as the value of your property increases over time.
Flexible Mortgage
Flexible mortgages allow you to :-
- make extra lump sum or monthly payments,
- borrow back money,
- take payment holidays and
- make underpayments.
- flexible mortgages can also double up as current accounts - your salary is paid in monthly and you are effectively paying off a huge overdraft.
Flexible mortgages do have higher interest rates than standard home loans, but it does allow you to pay your mortgage off earlier than you originally planned maybe by many years.
flexible mortgages can offer a much cheaper alternative to personal loans.
You must also know that if you pay your flexible mortgage off before the end of the flexible period, an early repayment charge may apply.
- Annual percentage rates (APR's) on flexible mortgages are usually a few per cent lower than the rates on secured personal loans