What is a Flexible Mortgage?
'Flexible mortgage' is a term that's used a lot, but what
exactly does it mean? A flexible mortgage allows the borrower to
make extra repayments when they have the extra money and even
reduce or skip payments should the need arise.
A flexible mortgage allows you to make extra payments to
reduce the amount outstanding on your mortgage thereby reducing
the interest you're paying or pay off your mortgage earlier than
Imagine being able to save money in mortgage interest, or
borrowing enough money pay off your credit cards or personal
loans, or buy a new car at a low rate of interest. That's exactly
what flexible mortgages enable you to do.
Flexible mortgages allow you to save money by cutting the
length of your mortgage term. You can also buy yourself more time
when money is tight by reducing your monthly repayments or
increase you mortgage if you need to borrow money.
'Flexible mortgages', also known as 'Australian mortgages' are
fast becoming the most popular way of taking out a new
Flexible mortgages are designed for people who want the option
to vary their mortgage payments to match changes in their cash
flow. To varying degrees, they let you underpay, overpay, take
payment holidays, pay off lump sums and borrow back
Flexible mortgages come in various guises but they mainly
allow you to make extra lump sum payments, borrow back money,
allow you to take repayment holidays and also allow you to make
underpayments. Some flexible mortgages will double up as a
current account, where your salary is paid in monthly and so you
are in effect paying off a huge overdraft.
Unlike some traditional loans that still charge mortgage
interest on an annual basis, fully flexible mortgages calculate
interest daily, which means that any overpayments you make are
immediately credited against your loan, thus reducing your
interest costs. This gives you the flexibility to manage your
mortgage payments to suit your cash flow needs as your
A Flexible Mortgage allows you to repay capital early, take
back some cash you have paid in and postpone payments. Some are
run as substitutes for current and savings accounts, so all your
money is working to minimise interest on the mortgage.
If you are looking for flexibility in the current mortgage
market, there are two important facts to bear in mind. First, the
majority of flexible mortgages tend to charge higher rates than
those available on more conventional mortgage deals.
Secondly, there is little difference between mortgages
marketed as fully flexible and conventional mortgages which are
offering an increasing number of flexible features. So unless you
want to use the full range of features offered by a flexible
mortgage, you may find the level of flexibility you are after on
a conventional deal at a much better rate.
Generally you can choose to have a variable or discounted rate
or sometimes a combination a variable and fixed rate. By choosing
to take part of your mortgage at the fixed rate allows you the
flexibility to make overpayments to the variable rate option
during the fixed rate period without any penalties.
A truly flexible mortgage should have all of the following
Interest is calculated at least monthly, preferably daily.
Overpayments are allowed penalty free.
You can take payment holidays.
You can make underpayments.
You can draw down any unused facility.
You may freely reprint this article provided the author's
biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the http://www.directonlineloans.co.uk
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