Flexible Mortgages explained - Apply for a Flexible Mortgage

If your income varies from month to month a flexible mortgage could allow you to stagger your payments when required. This type of flexibility suits many self-employed borrowers or those with an irregular income, as flexible mortgages are designed to adapt to an individual’s financial circumstances. For example, some months you may find you have more money and can pay a larger chunk of the mortgage, while other months you may wish to pay less.

Who is a Flexible Mortgage suitable for?

Anyone could benefit from the freedom that a flexible mortgage can offer you but in particular it is suitable for people with varying incomes, for example people who are freelance, self-employed or work on commission. This allows them to cater to varying monthly income. It also allows you to pay less when other costs creep up, for example home improvements or a one off cost for a family event.

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Are there different types of Flexible Mortgage?

Yes. The two main types of flexible mortgage are offset and current account, an offset mortgage links your mortgage to your savings account meaning you only pay interest on the different, while a current account mortgage combines all of your accounts and essentially extends your overdraft to the limit of the amount borrowed for the purchase of the property.

What are the advantages of a Flexible Mortgage?

A flexible mortgage allows you to over and under pay. Over-payments can generally be made up to 10% of your mortgage’s value, while underpayments are only encouraged if absolutely necessary. This is to avoid huge arrears and mortgage debt further down the line. Also, if you do wish to underpay your mortgage, many lenders will expect you to have built up a reserve of money to help cope with the periods when you can’t pay the amount in full.

Is a Flexible Mortgage cheaper than a Traditional Mortgage?

A flexible mortgage will work out cheaper than a traditional mortgage if you are likely to overpay more often than you under pay. Paying off your mortgage early could save you thousands. However the alternative, underpaying, will cost you more in the long run. It is important to consider whether or not you have the financial discipline to take advantage of the benefits of a flexible mortgage. Interest rates on a flexible mortgage change daily, once again this can mean that you can benefit immediately as the size of you debt decreases, but it also means that you will suffer immediately if it increases.

Flexible mortgages are ideal if you can overpay your mortgage every month, as this can reduce the interest and save you large amounts of money. However, for many people mortgage payments are large enough and the thought of overpaying the mortgage may seem completely unrealistic. Ask your mortgage lender about their own flexible mortgages or other standard mortgages which incorporate flexible policies. You may find they offer something which is flexible enough to deal with your financial situation without the need for over-payments.

A flexible mortgage allows you to have more control over your outgoings, you can overpay in months when your income exceeds expectations and underpay when times are hard. This is a big advantage of avoiding early redemption charges and reducing the total amount of your mortgage when the opportunity arises.

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