Flexible Mortgages

Used properly and fully understood a flexible mortgage could save you thousands of pounds over the life of your loan. Most people change their lender every five or six years or when they get to the end of a discounted or fixed period. In that time the market can change a great deal. For example In May 1991 the base interest rate was 11.5% today it stands at around 4.0%.

The market is also allot more competitive not than it was five or six years ago. The amount of remortgaging that occurs has increased massively because borrowers have begun to realise that there are potentially big savings to be made if you change your lender when the right opportunity and circumstances arise. The most prominent addition ito the market in recent years is the flexible mortgage.

The flexible mortgage came over from Australia in 1995. Since then every mainstream UK lender has included it in the range of products. To begin with the big players ignored flexible mortgages. However having seen their success that other providers were having they jumped on the bandwagon. Now, 22% of gross lending is taken up in this way.

This type of borrowing puts the control back in the buyers hands. It can be adapted to suit your circumstances and allows your money to work harder for you. Many companies have named their products in this way that so it can be difficult to discern the best deals. To help the following points should feature in this type of home loan :

The most important benefit and the one that will save you the most money over the course of your loan is the ability to overpay. You should be able to overpay at any time, and any amount, and by lump sum or regularly. This helps to reduce the total interest owing, and you can pay the loan off early. Interest should be calculated daily. Thus you get the overpayment's benefit immediately rather than waiting for a year should interest be calculated annually.

You should be allowed to underpay should you need to, usually after you have overpaid enough to cover the difference between your normal payment and your underpayments. You should be able to take a payment holiday, maybe for a couple of months or over Christmas. Again, you will probably need to have overpaid first to cover this.

There should be no redemption fees at any time, so you are free to pay off large chunks of your mortgage or move on without penalty. Finally, you should be able to borrow back money that you have overpaid should you need to. This type of home loan is particularly useful for the self employed or people with uneven income. You can overpay when you get unexpectedly high income, and underpay when you are struggling.

Flexible Mortgages :