What is Flexible Mortgage

As you can probably imagine by its name, a Flexible Mortgage offers a great deal of flexibility in regards to how you make your mortgage repayments. It was originally devised in Australia, but the package was imported to the United Kingdom in the mid 90’s - such is the reason why you may have heard it referred to as an “Australian Mortgage” in the past.

By taking out a flexible mortgage, you will have the lenience of being able to make overpayments or underpayments on your standard outgoings. This is extremely beneficial for people with somewhat unreliable jobs, or where income can’t be guaranteed as a steady stream.

Why would you want to make overpayments? For many homeowners, the idea of being attached to a mortgage for so long is extremely stressful. By making overpayments, you can both speed up the repayment process and limit the amount of interest that you’re paying (depending on the small print of the package).

Underpayments are equally useful, especially in times of financial need. If disaster strikes and you lose your job, or you can’t keep up with repayments - even if you simply want to take a break from the bills - it’s possible to pay under the standard repayment sum.

If things are really desperate, you can go as far as to take a break from repayments altogether. Most flexible mortgage providers will offer a short break of between 3 to 12 months where you can sit back and pay nothing. So if you’re in a seemingly irretrievable situation, it is at least possible to bargain for time. And this makes the flexible mortgage a very popular choice for homeowners in the twenty first century.

Most deals also come with the ability to borrow back money that you’ve sent in overpayments. This is fine for the lender because they stand a greater chance of the homeowner serving the full term. It’s also convenient for the homeowner who gets the best from both worlds. On the one hand, you can pay over the asked rate and get rid of your mortgage quickly. But if the need arises, you can draw back every last penny of your overpayments.

There is a drawback to the flexible policy and it comes in the form of, you guessed it, higher interest rates. Most mortgage lenders are sacrificing the very tools with which they make their money in offering such flexibility. To balance this out, you’ll find yourself lumbered with pricey interest rates and on the surface, it can seem a little daunting.

If you’re unsure whether the flexible mortgage is right for you, ask yourself how likely it is that you’d have trouble meeting the requirements of the other deals. There’s only a need for flexibility if you can’t hold down the fixed or variable rate mortgages. If you don’t absolutely need the flexibility, you’d most likely be better served pursuing another deal with lower interest rates. There’s no point in paying for a privilege that you’re not likely to take advantage of.