Understanding The Limits Of Flexible Mortgage Deals

The word flexible is a positive word, especially when used to describe a financial product. It makes the product sound easy, user friendly and not intimidating. And this is true of flexible mortgage deals - they are a great product with a lot of positives attached to them. Unfortunately there are downsides to these types of loans, but that doesn't make flexible mortgage deals bad mortgages. It just means that you need to be aware of the limitations before you choose to take out one of these loans.

They are more expensive

Because flexible mortgage deals are not regular vanilla loans, their rates are not as competitive as say, a fixed rate mortgage. The mortgage lender is offering you some flexibility, so for them to do that they need to cover their losses - because if you underpay for a month, or miss payments altogether, that will cost the mortgage lender money. But this is not to say that flexible mortgage deals are so expensive to be useless - the headline rate isn't everything. A good mortgage adviser will show you that there are many positives to flexible mortgage deals aside from the rate.

They do have limitations

Just because you can stretch the limits of the flexible mortgage deals that is not to say that you can do whatever you wish. There will be limits to the loans - limits on how long you can underpay, time periods in which you must declare a payment holiday and even limits to how much you can overpay. But flexible mortgage deals are still the best way to change the pace at which you pay a mortgage.

The more flexibility, the more you pay

If you choose to take a payment holiday, you may find that your rate increases for the next month with flexible mortgage deals. Of Or you may find that your credit score is inhibited. Also, when it comes to underpaying or overpaying you might find the next time you utilise the flexibility of the mortgage you will have to pay even more for the privilege. This is why, if you do choose to use the facets of flexible mortgage deals, you have to talk to a mortgage adviser first - it has to be the most sensible choice.

You need to seek advice to find them

You can walk up and down you high street as much as you like, but you are very unlikely to find flexible mortgage deals. These are specialist loans that need constant advice to be used properly, and mortgage lenders know this. That's why you need to go through a mortgage adviser if you want to get hold of flexible mortgage deals. But that's not a bad thing - mortgages can be complicated and daunting, so you should always try and get some advice before taking one on.

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© 2007 - 2010 Offset Mortgage Centre | Terms and Conditions | Privacy Statement | Your home may be repossessed if you do not keep up repayments on your mortgage. *Source Barclays Bank: Calculation based on an offset tracker product; repayment mortgage of £100,000 over a 25-year term that has been offset with £20,000 savings, resulting in a reduction in mortgage term of 8 years and 8 months or a saving of £44,867 in overall interest. Calculation assumes balance remains constant throughout the life of the mortgage and that the mortgage loan and savings balance will vary. Outcomes will be either a reduction in payments or a reduction in mortgage term. No interest is paid on balances offset against the mortgage. Typical rate is 6.45% (variable). The overall cost for comparison is 6.7% APR. **Source: Datamonitor - Uk Flexible Mortgages 2006 Report. ***Source: NS&I Press release - Short-term Savings need a good home too - July 2005.