People need more and more flexibility when it comes to loans and mortgages in today's world, which is always changing. Because of this, more and more lenders are offering mortgages that they call "flexible." The word "flexible," on the other hand, can mean a lot of different things. This article might help you figure out which mortgages are flexible and what the benefits of having a flexible mortgage are.
What does this word mean?
There are a lot of mortgages out there that say they are flexible, but there are some things that make a mortgage truly flexible. If you want to know if a mortgage is flexible, there are four main things you should look for. These things:
- Being able to pay too much
- Getting paid less than you should
Being able to take breaks from getting paid
Interest is worked out every day.
Overpayments
One of the best things about flexible mortgages is that you can pay more than you owe. With a traditional fixed-repayment mortgage, you can't easily pay more than your monthly fixed payment. If you have a flexible mortgage, you can pay as much each month as you can afford. This means that when things are going well, you can pay off your mortgage faster. If you regularly pay more than you owe, you can save a lot of money on interest.
Underpayments
Underpayments are another good thing about flexible mortgages, but you shouldn't use them too often. If you can't pay the full amount one month, you can just pay what you can. This is called "underpaying" on your mortgage. Even though this is good because it keeps you from not paying your bills, there are penalties. The more you don't pay on your mortgage, the longer it will last or the more you'll have to pay afterward.
Payment holidays
Payment holidays are like underpayments, but you can stop paying for a certain amount of time. Even though this may sound like a good idea, there are usually rules. Lenders won't let you take a break from making payments unless you've already paid more than you should have. After your break, you'll have to overpay again to get your payments back on track. People who are self-employed or who need to take a break from work for personal reasons can benefit from payment holidays, though.
Other benefits
You can also borrow money from your mortgage, which is another benefit of a flexible mortgage. If you have overpaid in the past and now need extra money for home improvements or something else, you can borrow the money you have overpaid. Even though you will be changing the terms of your mortgage again, getting a loan at the same rate as your mortgage is the best deal you can get on a personal loan.
If the ability to overpay or underpay and flexibility are important to you, you should choose a flexible mortgage.
