Flexible Mortgages
The Basics
There are a number of limitations to the standard
types of mortgages available if your income is
erratic, for example if you are self employed
or perhaps working on short term contracts. Flexible
mortgages overcome this problem by allowing the
borrower to make both over and underpayments into
the account. Indeed with enough credit you can
take a payment holiday. Usually this type of mortgage
will also calculate interest daily meaning that
you will see an immediate impact of any overpayments
that you make. A number of these mortgages may
also offer the ability to operate your mortgage
account as a bank account with the option to make
withdrawals in certain circumstances.
Advantages
Monthly payments can adapt to the level of monthly
income you receive. Interest is far more likely
to be calculated on a daily basis. Payment holidays
are permitted. In the longer term you should see
the reduction of the amount owing occurring more
quickly than a standard mortgage.
Disadvantages
Generally you will be una ble to obtain fixed,
discounted, capped or cashback rates on flexible
mortgages. The lack of discipline in the monthly
payment means the temptation is there to spend
the money on other matters.
Suitability
The flexible mortgage option is suitable in a
number of circumstances the most common being
those identified below:
- Self employed or contract workers
- Individuals looking to repay their mortgages
quicker than their basic income would indicate
as, possibly the result of expected bonus payments
and or share options.
- Borrowers with larger loans
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