Flexible Mortgages Adjust to Your Changing Needs

2007-03-08 10:33:40

( Financial )



When you need money for purchasing an asset or for refinancing mortgages, you normally apply for a conventional type of loan. Conventional loans may either have fixed rate or adjustable (flexible) rates. You can also choose combination types where you will pay fixed interest rates during a specified time period, then pay adjustable rates afterwards.

But while conventional types of loans require you to make on-time payments, they do not allow you to prepay or make late payments. If you prepay the mortgage, you will have to pay additional penalty charges.

Recently, a new type of loan called the flexible mortgage gives more than the usual options to personal or business borrowers.

Features of Flexible Mortgages

In flexible mortgages, you apply the same way as you do for conventional mortgages. You provide information about your sources of income, your personal and business accounts, and any other personal or business details needed for the application. The lender will also check your credit history. Depending on your qualifications, the mortgage lender will give you the credit amount limit, interest rate and loan period. Just as in conventional types of loans, you can take either a fixed or variable rate mortgage.

Unlike conventional types of mortgages, however, flexible mortgages allow you to overpay your periodic amortizations, and thus be able to settle your loan sooner than originally arranged. With an earlier prepayment, you can free up your mortgaged property earlier for other purposes. The lender does not charge you any penalty.

If you are temporarily short of cash, you can choose to make smaller payments or even take a repayment holiday. The lender will not charge you penalties but will readjust your future payment amounts.

If you move or sell the property, you can still keep the mortgage at the same terms and conditions. In this way, you save yourself the inconvenience of having to re-apply for a new mortgage. Instead you put up a new property to be mortgaged, and the lender will adjust your loan amount upwards or downwards depending on the value of the new property.

If you need to borrow additional funds, you can add more assets to serve as collateral, using the same flexible mortgage package.

Flexible mortgages are ideal for people who constantly need to relocate because of their occupation or lifestyle, or for businesses which frequently undergo changes.


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