FLEXIBLE MORTGAGE

Flexible mortgages are a relatively new development but are increasingly becoming a mainstream mortgage product.

Such mortgages allow borrowers to increase or decrease repayments and therefore the speed with which a mortgage is repaid.  With low interest rates being paid on savings at the present time, it makes financial sense to pay off a mortgage as soon as possible. 

Equally, in times of temporary hardship, such as a period of unemployment, it is valuable to reduce payments or even take a payment holiday.Below are some generally accepted principles for a flexible mortgage: -

Daily interest calculations (not monthly or annual) this in itself is a massive advantage to the borrower. On an annual rate accounting each monthly payment does not get credited to the account till the end of the year so you are paying interest on the full amount owed for 12 months. Only then will they credit the money to the account and reduce the debt. With daily interest it means just that as soon as you make any payment it immediately has an effect on the balance and therefore the interest charged.

Other features include.

Ability to over-pay more than the standard monthly payment to reduce interest payments & repay the mortgage early.

Ability to under-pay the standard monthly payments to cope with fluctuating incomes & temporary financial hardship (restricted by the lender’s maximum loan-to-value-limit, LTV)

Payment holidays

Loan drawdown facilities, to enable the customer to borrow extra funds back up to the original amount borrowed.

No early redemption penalties.