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Flexible mortgages came into the UK in the late 1990s. They
originated from Australia and potentially may be useful
financial
tool if used correctly though the borrower needs knowledge
and a regulated mortgage advisor can guide them through the
flexible mortgage maize. The flexi mortgage has many features
that need understanding as they may potentially save the borrower
in interest payments over the term.
Now
most lenders offer mortgages with some flexible features,
and there are many different types of flexi type mortgages
but a truly flexible mortgage should include over payment,
underpayment, payment holidays, daily interest, current offset
account, no early payment charges, low rate tracker and draw
down facility. Note there might not be a product that has
all of these features together. The availability of these
features of this type of mortgage may depend on the individual
borrower meeting the lenders terms and conditions. Getting
the best from some of these features my need detailed understanding
and certain criteria for example the current account.
Flexible
mortgages generally come with a slightly higher rate than
a discount mortgage because of the many benefits.
Ideally the borrower wants to make regular over payments and
lump sum payments in order to offset their loan. A current
account allows this to be achieved. If the borrower is financially
disciplined to make over payments the loan can be paid off
early and over all interest payments may be saved. It is not
in the borrowers interest to have a loan for a long time only
the lender's interest.
If
the borrower is a 40% tax payer then there potentially may
be benefits by offsetting their mortgage with their saving
that are earning equivalently a much higher rate of interest
than if that money where in a saving account due to the tax
factor and safer than an investment that may go up as well
as down. However getting the best from some of these features
my need detailed understanding and explanation
Caution
should be taken if there are too many underpayments and the
flexible features are never used to benefit the borrower.
As flexible deals may have a higher rate that is varible.This
product would be most suited to the
financially astute borrower.
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