A Flexible or ‘lifestyle’ mortgage is designed to let you make extra repayments when you have extra money, and to reduce or even skip payments when necessary. Flexible mortgages are those loans that let the borrower increase or decrease the amount of their mortgage repayments within specific limits.
Disadvantages of Flexible mortgages
With the term Flexible being used to promote so many mortgages in the market place it’s worth noting that not all of them include all the aforementioned flexible features. In addition each of the features is open to a huge variation in format from lender to lender. For instance some lenders will only allow under payment on sums that have been previously over paid. The amount of time that you have to have the mortgage before you are allowed to use some of the features such as payment holidays will vary as well. In an attempt to capitalise on the marketing of Flexible mortgages some lenders offer mortgages that many think are not truly flexible – so it’s certainly worth looking closely at the offer.
Hard To Compare Like For Like
The different versions of Flexible mortgage offered by lenders makes it hard to compare like for like across the market. Choosing a mortgage can be complicated enough, that’s why the use of a broker is advisable and getting expert advice on what all the various Flexible features deliver is a good idea.
Higher Interest Rates
As with all other types of mortgage nothing comes for free and the advantages gained in flexibility usually come at the price of higher interest rates than standard mortgage loans. If simply finding the lowest rate mortgage possible is a borrower’s main concern it is unlikely to be found in a Flexible mortgage.
Are You Going To Make Overpayments
For some borrowers the features and variables of Flexible mortgages add up to complexity and something that they would rather not grapple with. If a borrower simply wishes to take out a mortgage, make regular planned repayments without ever considering over payment then they are unlikely to get full use of the benefits of a Flexible mortgage. It’s also possible that a mortgage customer will find another mortgage that offers the one Flexible feature that they require, over payment for instance, at a better rate without choosing a truly Flexible mortgage.
Flexibility is only an advantage if it suits your lifestyle and circumstances so there is no point paying extra for it through an increased rate if it’s not for you.