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When these mortgages first came to the UK there were no fixed or discounted rate flexible deals available. Borrowers simply had to choose a variable rate, and the actual rates on offer were not anywhere as competitive as they are today. Alongside this, Flexible Mortgages are now mainly being viewed as suitable for people who have experience of being homeowners, not to point out managing their money, rather than first time buyers. However, as these mortgages have evolved, the benefits to the borrowers have increased and the first time buyers could a lot worse than thinking about taking out a flexible mortgage.
Flexible Mortgages are designed to give you better control over your finances, but you need to be cautious as there are different types of flexibility. Most flexible mortgages should allow you to overpay on your monthly payments, borrow back money from the overpayments, underpay your mortgage payments and also take payment holidays. The most advisable thing to do with a flexible mortgage is to make overpayments against it; this will help to pay the debt off quicker. You must also ensure but any money overpaid is still available for you to use if you need it.
A genuine flexible mortgage will allow you to make underpayments. This facility may be useful when you have periods throughout your mortgage when you have additional expenditure. Most lenders will insist that you have previously made overpayments against your mortgage before they will allow you to make any underpayments.
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1. Best Flexible Remortgage Sites
We've researched the top mortgage sites saving you time & money.
www.openwebshopper.com
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There are 4 main reasons why you should consider obtaining a flexible mortgage. These are:
You can make mortgage payments that suit you - the first huge advantage of a flexible mortgage is that you can vary your payments to adjust to your current financial situation and lifestyle. This could be a great help to those people who have small families and are facing childcare costs for the first time. At the same time, older ‘empty-nesters’ with more money could find a flexible home loan a faster way of becoming debt-free as they can use the overpayment facility to pay back the mortgage faster.
You can clear your mortgage debt before the end of the loan term – by having a flexible mortgage, you are able to repay the loan before the end of the term by making regular overpayments. This could save you large amounts of money in interest payments. On a £100,000 mortgage over 25 years, according to HSBC, a borrower overpaying £150 a month would pay off his mortgage around eight years and four months early, saving an outstanding £33,180 in interest payments. Putting a lump sum of £5,000 a year against the same mortgage cuts its life by almost 14 years thus savin
You can save money ‘wasted’ in interest payments – a flexible mortgage has the ability to supply you with amazing interest payment savings. A simple sum will tell you whether you are wasting your time saving. If the interest rate on your mortgage is greater than the net, i.e. after tax, interest rate on your rainy day savings account then you would be better off using your savings to reducing your mortgage.
It is a perfect home for bonuses - if part of your salary comes in lump bonus payments, a flexible mortgage is the perfect home for such earnings. The interest saved on your loan is likely to outweigh the amount you would normally receive from a savings account.
Almost every mortgage lender in the UK now offers flexible mortgages. You are now able to get flexible fixed rates, discounts and trackers. All mortgage lenders will have a mortgage calculator which will advise you of how much a mortgage will cost you initially, while any flexible lender can provide an illustration of how much over and underpaying could impact on your mortgage account.
You can leave your flexible mortgage deal with no penalties, and your interest is calculated daily. So as soon as you make a payment you start paying interest on a smaller loan amount.
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