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    • Posts Tagged ‘Flexible Mortgage’

    • Home Mortgage Loans

      Date: 2010.06.13 | Category: Mortgage | Response: 0

      Getting rid of the mortgage early is something that many home owners in the UK aspire to achieve. Being free of the principal financial debt in most people’s lives at the earliest stage possible offers financial security and peace of mind for later on in life. Paying off the mortgage early is no pipe dream though. In 2003, the average age of outright home ownership was 56, by 2004 the average age had fallen dramatically to just 48!

      How home owners pay off their mortgages early

      The secret to paying your mortgage off early lies in choosing the right type of home loan, and this is where flexible mortgage loans and offset mortgage loans step in.

      Flexible mortgage loans, as their name suggests, offer flexible mortgage repayment terms where overpayment of mortgage is allowed by the home owner without incurring a penalty. Some flexible mortgage loans allow overpayment of a limited amount, such as 10% of the mortgage value, while other flexible home mortgage loans cater for unlimited overpayment by the home owner.

      The advantage of flexible home mortgage loans is that as well as allowing you to overpay, you can also underpay, so taking a ‘payment holiday’ if finances become a little thin. Underpayment is of course subject to the terms of the mortgage, and will normally only be allowed if it amounts to less than the funds that have been overpaid.

      Overpayment via flexible home mortgage loans means that you get to reduce your mortgage capital as well as pay off interest accrued on the capital each month. For each successive month that you make an overpayment the amount of interest paid on the overall mortgage is therefore reduced. An overpayment of just 65 on an 80,000 mortgage with the interest rate at 6.0%, will see mortgage loans paid off 5 years early, amounting to a total saving of some 15,000.

      Offset home mortgage loans

      Offset home mortgage loans were unveiled to the home owner in 1998, and have gained a great deal of respect from home owners since that time. Offset mortgage loans help to pay off a mortgage early by using what is known as a ’sweeper’ system. Providing that the home owner has their current andor savings account with the mortgage loans provider, their available balance is ’swept’ across to their mortgage account each day to offsetreduce the amount of mortgage capital subjected to interest.

      To illustrate the advantages of offset mortgage loans, take a mortgage of 100,000 and a balance of 10,000 in your current account andor savings account. Instead of the interest rate being applied to the 100,000 every day or every month, the interest rate would be applied to your mortgage balance less the balance in your current account savings account. This means that interest would only be applied to 90,000 of your mortgage, effectively making 10% of your mortgage interest-free!

    • Flexible Mortgage Guide

      Date: 2010.02.07 | Category: Mortgage | Response: 0

      In todays 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.