Flexible Mortgages UK.

Sometimes, you need to be the person who decides when you make payments, not the lender. Sometimes, you may need a holiday from payments as you have been made redundant or have something that you really need to use your monthly payments to fund. Maybe you've received a large bonus, and can pay off a huge chunk of your mortgage in order to cut your interest payments. Lenders are aware of this, and have created flexible mortgage products to enable the borrower to take charge of their mortgage.

Bear in mind though that the lenders have taken advantage of this opportunity to offer products that they call 'flexible' but in fact are not, or are very different from what they should be. It will benefit you to do some research into the flexible products offered and treat claims for flexibility with caution. All flexible mortgages should allow underpayments and overpayments without penalty and should not have limits and caps put on them.

Flexible mortgage providers can sometimes put a minimum limit on the amount you can overpay. This could be where they say you can only overpay if you do so by £1000 or more, which is unrealistic, as many people will want to pay a certain amount over their mortgage payments every month, say £100. They might put an upper limit on the amount you can overpay, which should you receive a large bonus is not realistic either. If mortgage lenders call their product flexible but then restrict the number of payment holidays you take or stop you from borrowing back amounts that you have overpaid, then they are not being fully honest either.

First-time buyers will find flexible mortgages very useful, as they may have more disposable income, since they have no dependants. They can make over payments and make themselves a cushion for when they are starting a family or there is a large rise in interest rates, so it would be useful to take a break in payments.

People change jobs frequently, there are no jobs for life, or they may be working for many people at one time. Regular payments each month could be like a weight around the neck, both because of the necessity of paying each month and the inability to pay more should they receive a bonus or come into money. Flexible mortgages are good for these people, as long as they have the discipline, and don't just end up with a bigger loan and more interest payments on the interest gathered not paying their regular payments. Lenders like this, as it gets them more money, which is why they are happy to offer these products to borrowers.

 

 

© AskFinancially.com 2008

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