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What is a Flexible Mortgage? |
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This type of mortgage is relatively new. The interest rate can be discounted,
fixed, capped or variable, but has the big advantage that it is calculated daily or monthly instead of annually. This means
that any capital repayment of the loan will affect the interest charged on the outstanding balance immediately. By making
regular overpayments, the interest saved on the mortgage over the term can be quite significant. Also, most lenders will allow
funds to be drawn from the account up to the original mortgage balance or even allow payment holidays. |
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How
much could I save? |
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By making regular overpayments to a flexible mortgage, you could save
£000's in interest payments and shorten the mortgage term significantly. The illustration below shows an example of the potential
savings. |
Example: £80,000 repayment type flexible mortgage over 25 years at an interest rate
of 6.75%. The standard monthly payments on this mortgage would be £552.73. If regular monthly overpayments of £100 were to
be made, the mortgage would finish 7 years and 8 months earlier and the interest saved would be £30,051. |
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Note:
The larger the mortgage amount, the higher the interest rate or the longer the mortgage term, the greater the savings will
be. |
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