Flexible Mortgages

Written by Jeremy Horelick
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Flexible mortgages can save their owners thousands and thousands of pounds by putting control back in the hands of the borrower. Flexible mortgages are a relatively new phenomenon in the UK, and were at first resisted by mainstream lenders. Since then, these institutions have seen the sharp rise in flexible mortgages among sub-prime lenders and have consequently integrated them into their own product lines.

There's some confusion about what exactly makes for a flexible mortgage. Many mortgages that claim to be flexible do in fact give borrowers some degree of choice but are not considered flexible mortgages by definition. To qualify as a truly flexible mortgage, your loan must have a few distinct features. The most important of these is a provision that allows borrowers to overpay. As you already know, most lenders penalise buyers who pay more than their monthly premium since paying off your principal lessens the interest your lender collects.

More Features of Flexible Mortgages

On the flip side, flexible mortgages permit borrowers to underpay as well. More often than not, this requires that you first make a sufficiently large overpayment to offset the shortfall. You may also take a "mortgage holiday," which can be useful if you're going abroad, taking a sabbatical, or are just struggling to find work. There are no redemption fees either with a flexible mortgage. You can move about freely without incurring penalties.

You'll also have the benefit of a daily interest calculation. That way, if you overpay, you don't have to wait until your rates are reassessed in order to take advantage of your savings. Finally, a flexible mortgage allows you to borrow back money you've already paid. Again, this generally requires an overpayment first, so that you're truly borrowing your own money and not that of the lender.

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