Flexible Mortgages

A flexible mortgage is just what is says, you can make overpayments, and also make underpayments and take payment holidays or even borrow back monies paid you're your mortgage account subject to what overpayments you may have already made.

By choosing a flexible mortgage your main aim will be to make overpayments and by making additional payments over and above the minimum will allow you to pay off your mortgage early and therefore can potentially save thousands of pounds in interest payments.

As we all know however individual circumstances can change and with a flexible mortgage you can borrow back those overpayments if you need to or you could decide to stop paying your mortgage for a month or two by taking a payment holiday when family expenditure has suddenly increased.

A truly flexible mortgage should have no "tie in" period and allow you to leave it without paying an Early Repayment Charge (ERC), but many flexible mortgages come as fixed rates or with discounts, this is not always the case and so there may be a "tie in" period in the initial 2 or 3 years.

To make the most of making overpayments the mortgage product should calculate the interest daily, so that any overpayment is taken off your mortgage as soon as you pay it.

Many mortgage products now offer some degree of flexibility with the most common being an overpayment facility, some however do have caps on the amount you can overpay very often 10% of the loan amount per year.

There are of course pros and cons to taking a flexible mortgage the main disadvantage is that flexible mortgages do not always offer the lowest interest rate so there is often a slight premium to the rate because of the mortgage products flexibility. But on the plus side they can be ideal for anyone with a fluctuating income, for example the self-employed, or people who work on commission and if used properly can give you the potential to save thousands of pounds and put you more in control of your finances especially concerning your mortgage and their payments.

Your property may be repossessed if you do not keep up repayments on your mortgage.

For more information on how we are paid for mortgages please click here.

Grovelawn Financial Services, 1C Restormel Industrial Estate, Liddicoat Road, Lostwithial PL22 0HD — T: 01208 872689