Flexible mortgage
The term flexible mortgage refers to residential mortgage in UK. The flexible mortgage concept is in practice since 1995. It offers flexibility in the requirements to make monthly repayments. Typical features include the facility to make overpayments which means more than the normal amount. People can borrow back any previous overpayments. Borrower has a choice to pay less than the normal amount. The last option is the borrower can stop repayment for a certain period like 3 to 12 months.
The above features allow a flexible mortgage to be adaptable to individual situations. This facility is very useful and convenient for self employed borrowers and those who have a variable income." The variable income may be from any source like for example, the borrower earns a significant income by way of commission but the income earned is not constant at all the times. It varies according to the quantum of business he deals with. In this situation the borrower can contribute additional payments which create as overpayments and thereby he is able to reduce the term of payment.
In case of traditional mortgages, borrowers cannot enjoy above facilities but on the contrary he is penalized for additional repayments. He is penalized for irregular repayments as well.
The mortgage which is monetary advance borrowed to acquire a home is paid back over a defined period. The normal pay back period term is 25 years but it can be revised according to your situation. The mortgage consists of two important parts i.e. capital amount borrowed and the interest. There are two varieties of mortgage loans:
A repayment mortgage product requires paying the principal amount of the loan plus an interest over the term of the mortgage. Borrower will be free from this mortgage debt, provided he pays monthly repayments regularly over a period of the term as per an agreement.
In a repayment mortgage loan you have assurance that your house will be totally repaid at the end of the loan. At the start of the mortgage the repayment amount constitutes mainly the interest portion repayment and not a part of the capital. If you have to move property regularly or re-mortgage to reduce the interest rate, you could find that a small percentage of the principal is repaid.
An interest only mortgage category borrower has to repay only the interest part but he has to give a guarantee for repayment of the principal by the end of term. To present the guarantee he has to opt for an investment product or savings tool like pension policies and so on. The other way he can choose is to generate a sufficient amount by reselling other assets.
Suppose your investments or saving tools appreciate better than your expectation, you can reimburse the capital earlier than the stipulated period. This will reduce the length of the loan and save money.
The selection of a mortgage repayment method depends upon your personal financial and employment circumstances.
There are no set rules for mortgage loan amounts. Lenders can offer loans equivalent to five times of your annual salary, based on your individual circumstances such as number of children you have, your current level of borrowing, etc.
A small number of lenders provide lending for applicants who have a bad credit to their account. These lenders are called sub-prime lenders.
You can access internet to find out appropriate mortgage providers on flexible terms.
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