How To Use A Flexible Mortgage

How To Use A Flexible Mortgage



How to​ Use a​ Flexible Mortgage
In today’s ever-changing world,​ people need more and more flexibility when it​ comes to​ borrowing and mortgages .​
With this in​ mind,​ more and more lenders are offering what they term as​ ‘flexible’ mortgages .​
However,​ the​ term ‘flexible’ can mean a​ lot of​ different things .​
If you​ are unsure about which mortgages are flexible and what the​ benefits of​ a​ flexible mortgage are,​ then this article might be helpful to​ you.
What does flexible mean?
Although there are a​ lot of​ mortgages that claim to​ be flexible,​ there are some things that define a​ truly flexible mortgage .​
There are four main characteristics you​ should look for when determining if​ a​ mortgage is​ flexible .​
These are:
· Being allowed to​ overpay
· Being allowed to​ underpay
· Being able to​ take payment holidays
· Interest is​ calculated daily
Overpayments
One of​ the​ best features of​ flexible mortgages is​ the​ ability to​ overpay .​
With traditional fixed repayment mortgages,​ there is​ no easy way for you​ to​ pay more than your fixed repayment each month .​
If you​ have a​ flexible mortgage,​ then you​ will have the​ ability to​ pay as​ much as​ you​ can each month .​
This means that during the​ good months you​ can speed up the​ process of​ paying your mortgage back .​
If you​ regularly overpay then you​ can save yourself thousands of​ pounds in​ interest payments.
Underpayments
Underpayments are another useful feature of​ flexible mortgages,​ but they should be used sparingly .​
If you​ are unable to​ make the​ repayment in​ a​ given month,​ then you​ can just pay as​ much as​ you​ can,​ effectively underpaying on​ your mortgage .​
Although this is​ good as​ it​ stops you​ from defaulting,​ there are penalties involved .​
The more you​ underpay,​ the​ longer the​ mortgage will last or​ the​ higher your repayments afterwards will be .​
Payment holidays
Payment holidays are similar to​ underpayments,​ but they let you​ completely halt payment for a​ period of​ time .​
Although this might sound appealing,​ there are usually restrictions .​
Lenders will not let you​ take a​ payment holiday unless you​ have overpaid in​ the​ past,​ and after your holiday you​ will have to​ overpay again to​ get the​ repayments back on​ schedule .​
However,​ payment holidays are useful for people who are self employed or​ who want to​ take a​ break from work for personal reasons.
Other benefits
Another benefit of​ flexible mortgages is​ the​ ability to​ borrow back money from your mortgage .​
If you​ have overpaid in​ the​ past but are now in​ need of​ extra cash to​ fund home improvements or​ some other purchase,​ then you​ can borrow the​ money back that you​ have overpaid .​
Although you​ will be changing your mortgage terms again,​ getting a​ loan at​ the​ rate of​ your mortgage is​ the​ lowest personal loan rate you​ can possibly get .​
If having flexibility and the​ chance to​ overpay and underpay is​ important to​ you,​ then you​ should definitely opt for a​ flexible mortgage.




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