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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