|
|
Flexible Mortgage
If you want to be in full control of your finances,
including your mortgage payments, then the only answer is to opt for a
flexible mortgage. This type of mortgage is by far the most customisable
on the market, giving you the freedom to change the payments and duration
of the mortgage as you need.
There are several key areas of a flexible mortgage that distinguish it
from the rest, the first is the flexibility in the payments, allowing
you to overpay and underpay without penalty. Overpayment is where you
pay more in a month than the set monthly repayment, this reduces the amount
owing on the mortgage and can lead to you settling the mortgage in less
time. Underpayment is the diametric opposite, you pay less than the standard
monthly repayment – something that will increase the duration of
the mortgage.
In general there is no limit to the amount that you are allowed to overpay
– if you wish to pay of the entire mortgage then you are free to
do so, it is slightly different with the underpayment however. Most lenders
will set a maximum amount that you can underpay by, and it may be dependant
on you having made overpayments previously.
All this gives you the flexibility to manage your money month by month,
as you need – the effect these have on the cost of your flexible
mortgage are instant, as the interest on the mortgage is calculated daily.
As a result, overpaying will have the effect of saving you money, as the
outstanding amount will be less and therefore the interest is calculated
against a smaller amount, the reverse is true of underpaying. The interest
rates on a flexible mortgage will be higher than on standard mortgages,
but the benefits of the flexible payment nature will outweigh this for
many people.
|
|