Mortgage Advice - Flexible Mortgages

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There are other additional features and benefits to be considered when deciding on the best mortgage for a borrower.

1. FLEXIBLE / LIFESTYLE MORTGAGES

2. CURRENT ACCOUNT MORTGAGE (CAM)
   

Flexible lifestyle mortgages

The flexible mortgage concept was imported from Australia so you may hear people referred to it as 'Aussie style mortgages'.

A Flexible or lifestyle mortgage is designed to let you to make extra repayments when you have extra money if you get paid a bonus or if you have done some over-time. It also allows you to reduce or even skip payments when necessary, so if you go on holiday or you are off sick for a month. Borrowers will however have to build up a reserve through overpayments before allowing you to underpay or skip payments. The main benefit of flexible mortgages is that many schemes are offered on a Daily or Monthly Interest Calculation basis. Until the arrival of flexible mortgages most, if not all, UK lenders were charging interest on an annual basis which meant that borrowers making over-payments were not getting the benefit straight away because it could be a year before the capital was reduced by the over-payment. Whereas, on a mortgage where the interest is being calculated on a daily basis, any over-payment reduces the mortgage balance immediately hence the borrower will be charged less interest from the next day. So if you can pay your mortgage weekly and you can pay a little bit extra every now and then, you will shorten you term and therefore save thousand of pounds.

Current account mortgage

This is a flexible mortgage linked to your current account. These mortgages have the benefits of the flexible mortgage and use the funds held in your current account to offset the interest on a particular day a borrower has a mortgage balance of £60,000 and has £5,000 held in the current account. The customer is charged mortgage interest on £55,000 the mortgage balance minus the positive balance held in the current account.

Some of the newer companies that have come into this sector are also linking savings accounts, credit cards, mortgages and personal loans together into combined accounts.

Mortgage auction

Mortgage auctions have totally changed the mortgage market in U.S.A and Canada. But customers in the UK already have a massive choice and you will always find one that will suit your specific needs and rates in the UK are very competitive at the moment.

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