FLEXIBLE MORTGAGE

It always makes sense to consider all the options and you may find the advantages of a flexible mortgage attractive.

Flexible mortgages allow you to change the size and timing of your loan payments to suit different financial circumstances and can help you pay off you mortgage quicker if you wish. These changes to your loan repayment amount can be provided as part of many of the current interest rate deals.

In effect, a flexible mortgage provides the facility to overpay or underpay a monthly payment, take payment holidays and offset current and savings bank account balances to enable you to repay your mortgage early.

Overpayment Mortgages and Borrow Back

An overpayment mortgage could allow you to pay more than your normal repayment each month and/or just pay a one-off lump sum to reduce the size of your mortgage loan.

The benefit of paying off some capital like this is that your future interest payments will be less and if you continue to pay off a higher amount each month then the mortgage will be paid off that much quicker.

By overpaying your repayments each month you could potentially save yourself hundreds or even thousands of pounds over the years.

The biggest benefit of overpayments will be for those mortgages where interest on what you owe is calculated daily.

However if you are going to pay off you mortgage early check that your deal lender won’t inflict early redemption charges on you, as these can often be quite large.

Once you have made several overpayments some lenders, depending on the size of your overpayment reserve, will allow you borrow back money from the reserve to spend on whatever you want.

Underpayment Mortgages

An underpayment mortgage will allow you to make smaller monthly payments than normal for a specific period of say 6 or 12 months.

Usually you would be expected to have made several overpayments in the past to cover your underpayments.

Payment Holiday Mortgages

If times get tough such as might happen if you lost your job or you have to take time off work to look after your family then you might appreciate the ability to take a payment holiday and stop making payments completely for a period of time.

Unfortunately there is no ‘free lunch’ with this one as interest will continue to be charged and added to your loan amount, and when you return to making normal repayments the monthly amount is likely to be larger than before it stopped. You may even have to extend the term of your loan so you can reduce the higher payments to something more manageable.

Loan Draw Down Mortgages

With a Loan Draw Down Mortgage you are able to borrow extra money without seeking approval from your lender providing you stick to a preset limit. The facility is already built in to the mortgage so there is no delay in getting the money, which would be the case if you had to formally apply to your lender for another loan.