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Flexible Mortgage UK – Mortgages To Specially Suit The Self-employed
By: Aileene Woul
While a person drawing a fixed salary every month finds it easy to repay loan in
fixed monthly instalments, those with a fluctuating income will find it
otherwise. In order to tap the potential of the latter group, which principally
consists of self employed people and people whose income is largely contributed
by commissions, flexible mortgages have cropped up.
A fluctuating income makes the case of these people inappropriate for regular
mortgages because of two reasons. Firstly, lenders would not prefer a borrower
with fluctuating income. Secondly, the borrower with such an income structure
would himself find it difficult to make timely payments.
Flexible repayments, payment as and when you like, and the option to repay the
whole of the loan at the time you want, are some of the qualities that flexible
mortgages in the UK are characterised with.
Before you perceive this as the ultimate freedom, let us remind you that not all
good things come for free. This aptly holds in case of flexible mortgages. The
rate of interest charged on flexible mortgages is higher than the interest
charged on the regular mortgages.
In spite of a higher rate of interest, the popularity of flexible mortgages in
the UK sees no decline. Until the time an alternative to flexible mortgage
comes, self-employed people will continue using it. The advantages of flexible
mortgages have overshadowed its drawbacks.
Flexibility of repayments forms one of the most important advantages of flexible
mortgages. As against the traditional mortgages where borrowers are required to
pay a fixed instalment every month, flexible mortgages are easy on repayment
rules. Consequently, in a month when the resources are not enough or when the
borrower is incapable to make repayments at the normal rate because of loss,
lesser repayments will be required. Similarly, when the borrower is in the
capacity to pay more than what is required, he can make an overpayment. Paying
less also means paying nothing. This is actually true though hard to believe.
Payment holidays form one of the prime attractions of flexible mortgages. During
a payment holiday the borrowers gets exemption from making payments altogether.
The exemptions will depend on the borrowers regularity in the previous months
and if sufficient balance of the loan has been overpaid.
Next in the list of advantages, is the facility to draw as many times from the
amount paid. Thus, flexible mortgages have the provision to allow borrowers to
draw from the amount that they have already paid. This again requires the
borrower to have made enough repayments before the use of this facility is made.
While this creates a constant source of funds for the borrowers, it also
increases the length of period for which the mortgage will continue and the
interest burden.
Since there is a constant change in the balance that is remaining to be paid,
charging interest annually or monthly would be costlier for the borrower. The
third advantage of flexible mortgage deals with an ingenious way to lessen the
interest burden. Interest in flexible mortgages is calculated daily. The daily
calculation of interest ensures that periods in which the balance unpaid is less
because of overpayment does not lose on the interest.
The list of advantages does not end here. Premature settlement of accounts is a
facility that is singly available in flexible mortgages. Unless otherwise
stated, mortgagees will charge a premature payment penalty. Flexible mortgages,
on the other hand, allow borrowers to repay the mortgage before it is due
without any penalties. A borrower who wants to escape the high interest rate
will find this clause in their favour. A loan taken to meet an occasional
deficit in finance will be paid as soon as the borrower receives the necessary
resources.
Depending on the credit status a borrower enjoys, he will get flexible mortgages
accordingly. The application procedure of the flexible mortgage is very similar
to the regular loans and mortgages. Online applications and online processing
helps in accelerating the pace of approval of flexible mortgages.
About the Author:
If finding the right loan was easy, Aileen Woul would not have been writing
articles. Read her articles to take advantage of her expertise for your
advantage.To find a cheapest mortgage,adverse credit mortgage,residential
mortgage that best suits your need please visit
www.cheapestmortgageuk.co.uk
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