Guide to Flexible Mortgages

Outlined below is a useful guide to flexible mortgages. Flexible mortgages are also known as Australian Mortgages because they usually feature something which is common in Australia - interest recalculation on a daily basis.

Daily interest rate calculation means that the amount you owe falls each month as a little more capital is paid off with each mortgage payment. Most flexible mortgages now offer daily calculation of interest, so changes to the outstanding balance are taken into account immediately.

The flexible mortgage was originally designed to help homeowners take a more pro-active role in managing their debt. Since their inception they have increased dramatically in popularity.

Flexible mortgages allow you to tailor your mortgage to suit your lifestyle. A flexible mortgage allows you to make additional or lump sum payments in excess of your scheduled amount, enabling you to pay off your mortgage early. By reducing the capital amount of your mortgage in this way, you are also reducing your monthly interest payments. You may take this money back at any stage or use it to take a repayment "holiday".

A flexible mortgage typically allows you to increase and reduce payments. This flexibility allows you to match your income patterns to your out-goings. If you repay extra each month you can reduce you mortgage balance and interest charged resulting in substantial savings being made.

Flexible mortgages are loans which allow you to increase or reduce the size of your repayments within certain limits. This may help you cope with changes in your income or spending, and reduce your outstanding commitments without penalty.

Each lender has a different idea of what makes a mortgage flexible choosing to combine all or some of a set of flexible features. Flexible features include regular overpayments, lump-sum overpayments, lump-sum withdrawals and payment holidays. Customers may also be able to make payments weekly.

Flexible mortgages offer the safety net of being able to take occasional payment holidays when financial times get tough. But the payment holiday safeguards lenders put in place to ensure borrowers are generally prevented from falling into arrears or negative equity vary considerably from lender to lender. So it is vital to check the terms and conditions of each loan. A large number of lenders allow payment holidays where the borrower is drawing back on a reserve limit agreed at the time of the mortgage application.

Many self-employed people whose income varies from one month to the next find these products helpful. They can make overpayments when earnings are at the annual peak and cut payments when earnings fall again. Some flexible mortgages allow you to withdraw sums you have overpaid into your mortgage account for emergencies.

Borrowers will usually have to build up a reserve through overpayments before being allowed to lower or miss payments. The benefit with a flexible mortgage is that many lenders offer rates that are calculated on a daily basis. The advantage to this type of mortgage is that even by overpaying the mortgage by a small amount on a regular basis, it can reduce your mortgage term by years

Some flexible mortgages operate as both a current account and a mortgage account. The advantage of a flexible mortgage is that all money is controlled within one account and savings can be used to offset the debt. With flexible mortgages interest is only paid on the balance outstanding at the end of each day, leading to less overall interest payments.

Most flexible mortgages follow the lender's standard variable rate, although a few lenders offer short-term discounts. The interest charged on a flexible mortgage is usually high compared to a short-term special offer rate, such as a fixed rate or discount.

To get the maximum benefit from a flexible mortgage you will need to actively use the flexible elements of the loan, otherwise there is little point in taking out this type of mortgage.

Your home is used as collateral for the flexible mortgage, so if you fail to make repayments on the Flexible Mortgage the lender can take procession of your home and resell it to cover the debt.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

---

Refinance Your Second Mortgage

A 2nd mortgage is a secured loan on your property,... Read More

First Time Buyers Fail To Shop Around

Almost two thirds of first time buyers accept the first... Read More

Should You Get an Interest-only Home Mortgage?

Before you consider taking out an interest-only mortgage, you should... Read More

Non-conforming Home Loans vs Conforming Loans

The simple definition of a "non-conforming home loan" is: You... Read More

Mortgage Advice To Make Mortgages A Really Smooth Ride

Mortgages are easy as long as you understand them well.... Read More

Self Employed Mortgage Loans - A Survival Guide

When you're self employed you have numerous advantages. As you... Read More

Homebuyers Loan Guide

If you are a homebuyer, there are a few points... Read More

Option ARM Mortgage Loan - Is This Really for You?

What happened to the days of a 15 or 30... Read More

Buying a House? How Much Home Can You Afford?

Maybe you've heard the expert advice that your debt to... Read More

Home Mortgage Rate Shopping - Why Some Shoppers Give Up And Others Dont

About 29% of current homeowners and a much larger percent... Read More

Reverse Mortgages: When Is One Right For You?

How do you know if a reverse mortgage is right... Read More

How To Save Hundreds A Month On Your Mortgage

When it comes to American spending habits, the sad truth... Read More

Why Choose a Home Improvement Loan?

Many people choose to take out home improvement loans so... Read More

Selling Your Business Note

Before I go further, let me ask a question- if... Read More

7 Credit Improving Steps You Must Take Before Applying For A Mortgage

If you think you have good credit, think again. Chances... Read More

Mortgage ? What, Why, When, and How?

What is a mortgage? Here's what The New Merriam ?... Read More

Secrets Your Banker Wont Tell You - Which Loan is Best for You?

Recently I was driving in my Car and I heard... Read More

Refinance Your Mortgage to Rebuild Credit

Refinancing your mortgage is one way to rebuild your credit,... Read More

How to Secure the Best Mortgage Deal and Save Yourself Thousands in Interest

When you consider that the average home owner will pay... Read More

Is It Time To Buy A House?

At some point as you're writing out your rent check,... Read More

A Guide to Getting a Home Improvement Loan

If you've got a few things around the house that... Read More

Mortgage Basics for First Time Home Buyers

Anyone planning to take out a mortgage for the first... Read More

Mortgages After Bankruptcy: Easier Than You Would Expect

Give yourself time to rebound. Whether you had to turn... Read More

Mortgage Loan Most Bankers Wont Give May Be Exactly What You Need to Buy or Refinance Your Home

A few years ago, a loan officer who worked for... Read More

Understanding Mortgage Points

When a mortgage broker asks a borrower to pay points,... Read More

Remortgage To Release Equity By Improving Interest Rate

You have been paying on your mortgage for quite sometime... Read More

Ten Things a Mortgage Processor Must Know to be Effective

From time to time, we hear a story about a... Read More

What Are Mortgage Brokers And Why To Use One

"Mortgage" is formed from two words: the French word "mort"... Read More

California Refinance - Refinancing in California

The real estate market in California is booming. Home values... Read More

Construction Loan Basics

It might not be too big of an exaggeration to... Read More

How to Use a Home Equity Line of Credit Calculator

Most home owners know that the lower the interest rate,... Read More

What is a Fixed Rate Mortgage?

As the term implies, with a fixed rate mortgage the... Read More

Mortgage Marketing

W. Edwards Deming said "Marketing and innovation are the only... Read More