Flexible Mortgage Tips
Outlined below are some useful flexible mortgage tips. The
most prominent addition in recent years to the mortgage industry
has been the flexible mortgage. As the name implies, it offers
greater flexibility than the traditional mortgage.
Flexible mortgages are fast becoming the most popular way of
taking out a new mortgage. The reason for this is that this type
of mortgage allows you to take control of your mortgage and not
the other way round.
Unlike some traditional mortgage 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. It means you get the maximum benefit from
your overpayment benefits immediately, since you don't need to
wait for an annual interest calculation.
Many self-employed people whose income varies from one month
to the next find flexible mortgages particularly helpful. They
can make overpayments when earnings are at the annual peak and
cut payments when earnings fall again.
Some flexible mortgages allow you to withdraw sums you have
overpaid into your mortgage account for emergencies.
A flexible mortgage allows you to make additional or lump sum
payments in excess of your scheduled amount, enabling you to pay
off your mortgage early. By reducing the capital amount of your
mortgage in this way, you are also reducing your monthly interest
payments. You may take this money back at any stage or use it to
take a repayment "holiday".
This gives you the flexibility to manage your mortgage
payments to suit your cash flow needs as your circumstances
change. These Flexible Mortgages allow 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
Some mortgage lenders offer a current account arrangement with
their flexible mortgages. You can pay your monthly salary into
the account thereby reducing the amount outstanding and the
interest payments. For the rest of the month, you can use the
account for day-to-day expenses and to pay direct debits. Some
lenders require borrowers to pay in their salaries as soon as the
account is up and running.
The advantage of a flexible mortgage is that all money is
controlled within one account and savings can be used to offset
the debt. With flexible mortgages interest is only paid on the
balance outstanding at the end of each day, leading to less
overall interest payments.
The flexible mortgage allows you to pay the mortgage back
quicker than your agreed monthly repayments stipulate.
Traditional mortgages would charge you for repaying early, but
with a flexible mortgage you can repay early, save on the
interest, and reduce the total amount owing.
Truly flexible mortgages will allow you to underpay - however
this will only usually be offered if you have overpaid enough to
cover the difference. In the same way as you can with
underpaying, if you are keeping up with repayments and have
ideally overpaid, you will be able to payment holidays.
The flexible mortgage will not charge you for moving mortgage
lenders as most traditional mortgages will. You are free to
overpay, underpay and swap mortgage lenders without financial
There are no standard repayment methods. Each mortgage
provider will specify the extent of flexibility on its Flexible
Mortgage and the interest rate may be variable or fixed.
Before taking out a flexible mortgage, make sure you are aware
of how you handle your finances. If you are inclined to raid your
savings on a regular basis, a flexible loan is unlikely to suit
Most mortgage lenders offer an annual statement showing the
balance of the account, the number of overpayments you have made
and how much interest you have saved.
Many flexible mortgage providers now offer tracker rates, so
you can now enjoy the elements of a flexible loan while following
the rise and fall of interest rate movements.
If you simply want to be able to make the odd lump-sum
repayment or to overpay on a regular basis, it may be a good idea
to look at what else is on offer in the mortgage market. As the
flexible mortgage becomes even more popular, many lenders are
offering conventional mortgages with flexible elements.
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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