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    • Flexible Mortgage UK Mortgages to Specially Suit the Self-employed

      Date: 2010.02.14 | Category: Mortgage | Response: 0

      Flexible Mortgage UK Mortgages to Specially Suit the Self-employed

      While a person drawing a fixed salary every month finds it easy to repay loan in fixed monthly instalments, those with a fluctuating income will find it otherwise. In order to tap the potential of the latter group, which principally consists of self employed people and people whose income is largely contributed by commissions, flexible mortgages have cropped up.

      A fluctuating income makes the case of these people inappropriate for regular mortgages because of two reasons. Firstly, lenders would not prefer a borrower with fluctuating income. Secondly, the borrower with such an income structure would himself find it difficult to make timely payments.

      Flexible repayments, payment as and when you like, and the option to repay the whole of the loan at the time you want, are some of the qualities that flexible mortgages in the UK are characterised with.

      Before you perceive this as the ultimate freedom, let us remind you that not all good things come for free. This aptly holds in case of flexible mortgages. The rate of interest charged on flexible mortgages is higher than the interest charged on the regular mortgages.

      In spite of a higher rate of interest, the popularity of flexible mortgages in the UK sees no decline. Until the time an alternative to flexible mortgage comes, self-employed people will continue using it. The advantages of flexible mortgages have overshadowed its drawbacks.

      Flexibility of repayments forms one of the most important advantages of flexible mortgages. As against the traditional mortgages where borrowers are required to pay a fixed instalment every month, flexible mortgages are easy on repayment rules. Consequently, in a month when the resources are not enough or when the borrower is incapable to make repayments at the normal rate because of loss, lesser repayments will be required. Similarly, when the borrower is in the capacity to pay more than what is required, he can make an overpayment. Paying less also means paying nothing. This is actually true though hard to believe. Payment holidays form one of the prime attractions of flexible mortgages. During a payment holiday the borrowers gets exemption from making payments altogether. The exemptions will depend on the borrowers regularity in the previous months and if sufficient balance of the loan has been overpaid.

      Next in the list of advantages, is the facility to draw as many times from the amount paid. Thus,

      Since there is a constant change in the balance that is remaining to be paid, charging interest annually or monthly would be costlier for the borrower. The third advantage of flexible mortgage deals with an ingenious way to lessen the interest burden. Interest in flexible mortgages is calculated daily. The daily calculation of interest ensures that periods in which the balance unpaid is less because of overpayment does not lose on the interest.

      The list of advantages does not end here. Premature settlement of accounts is a facility that is singly available in flexible mortgages. Unless otherwise stated, mortgagees will charge a premature payment penalty. Flexible mortgages, on the other hand, allow borrowers to repay the mortgage before it is due without any penalties. A borrower who wants to escape the high interest rate will find this clause in their favour. A loan taken to meet an occasional deficit in finance will be paid as soon as the borrower receives the necessary resources.

      Depending on the credit status a borrower enjoys, he will get flexible mortgages accordingly. The application procedure of the flexible mortgage is very similar to the regular loans and mortgages. Online applications and online processing helps in accelerating the pace of approval of flexible mortgages.

    • 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.

    • Fixed Rate Mortgage Advice

      Date: 2010.01.17 | Category: Mortgage | Response: 0

      One of the most important decisions you will make in your financial life is which mortgage you should get. For many people, the option of a fixed rate mortgage seems appealing. But what exactly is a fixed rate mortgage, and why do so many people choose this option? If you are new to mortgages then this article will let you know a little more about fixed rate mortgages and their benefits.

      What does fixed rate mean?

      A fixed rate mortgage is fairly straightforward, and does exactly as the name suggests. A fixed rate mortgage has an interest rate that remains the same throughout the mortgage term, meaning that your monthly repayments will remain the same, allowing for inflation of course.

      Why a fixed rate mortgage?

      Many people choose fixed rate mortgages because of the security and peace of mind that they provide. If you have a fixed rate mortgage, then you know your monthly repayments will not change, meaning you can budget effectively for both the short and long term. If you have a mortgage with a variable rate of interest then your payments can change depending on market fluctuations. This can leave you paying less, but often leaves you paying more each month. The best times to get fixed rate mortgages are when competition is high, and the fixed interest rate is lower than that of the tracker or variable rate mortgages.

      Are there any drawbacks?

      There are drawbacks to getting a fixed rate mortgage. The biggest drawback is that the interest rate is usually higher than that of variable rate mortgages. The added security comes at a price, in that you have to pay more in interest over the length of the mortgage. Also, the fixed rate is usually only fixed for a certain number of years, usually 2 or 3, after which the rate can be put up and then fixed for another period. This can mean that your mortgage will be cheap now, but in the future the rate could rise.

      Who should get fixed rate?

      Despite its drawbacks, there are many people that should definitely opt for fixed rate mortgages. If you are on a tight budget and have a fixed income each month, then you cannot afford for your payments to rise. Having a fixed repayment each month means that you know you can make the payment even if national interest rates rise. Also, if you can get a deal whereby the starting interest rate is lower than that of a variable rate mortgage or even the same, then opt for the fixed rate mortgage.

      How to decide?

      If you are still unsure about whether or not a fixed rate mortgage is right for you, then consult an independent financial advisor. They will be able to help you find the best deal, as well as tell you whether or not the base interest rate is going to fall or rise. This will determine whether a fixed or variable rate mortgage is best for you.