Flexible Mortgages: Your Questions Answered

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What exactly are flexible mortgages?

Flexible mortgages
are just that – flexible. They allow you to make over payments, underpayments, one-off payments, take payment breaks, borrow back again over payments, are transportable, calculate interest every day and most don’t charge early repayment charges (ERCs).

Are there various types of flexible mortgages?

Current account mortgages and offset mortgages are both kinds of flexible mortgage. A current account mortgage connects your current account with your mortgage account. Interest is determined on a daily basis so that you gain by cutting your outstanding debt briefly each time your earnings get paid into it – i.e. less interest accrues on your mortgage when you have extra funds in your current account.

Offset mortgages are similar to current account mortgages but they integrate any savings accounts you have and can also consolidate credit card debt and {personal} loans along with your mortgage.

Plenty of mortgages nowadays though have degrees of flexibility. They may allow you to make {over} {payments} {of a} fixed sum each month. This may be sometimes a fixed amount of say, up to £500, or a set percentage, say 10% of the remaining loan.

What are the pluses and minuses of flexible mortgages?

By making regular over payments you decrease both the timeframe of the mortgage as well as the amount of interest you have to pay on it. If you receive bonuses in your job you may possibly enjoy the chance of being able to make lump sum payments in case you want to.

If the need occurs you have the ability to make under payments or take payment holidays without going into arrears and getting into problems with your loan provider.

You’ll also be in a position to make a lump sum withdrawal or borrow back. Some lenders only enable you to borrow back any over payments you’ve made but others will allow you to borrow back the total level of your initial loan. This characteristic can be great should you perhaps want to make house improvements as the rate you pay on your mortgage will be less than the rate you would get for a personal loan.

Some of the benefits of a flexible mortgage can also be the negatives. If you know you have the capability to constantly borrow back again funds and you aren’t very disciplined you could wind up stretching the term of your mortgage or never paying back any capital, or even wind up owing more than you did to begin with.

In the event you would like to find out a lot more about flexible mortgages then talk with an expert mortgage consultant who’ll help you determine whether it would be a beneficial option for you personally.

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