A flexible mortgage is a type of mortgage prevalent in European countries. It is a bit more dynamic than the conventional mortgage found in the United States, in that it allows borrowers to pay what they can each billing cycle.

The minimum payment on a flexible mortgage is often just the interest owed for that time period. Since interest payments don’t total to a substantial amount of money, even large financial disasters will not mean you lose your home in the wake of instability. This is ideal for the self employed business owners of the world, as well as contract workers who have temporary work.

Remember that only paying the minimum interest payment is not a good plan for you financially. It will only put away fears of a foreclosure- it won’t allow you to make progress on paying off your mortgage. Months in which are paid as minimum will essentially add another month onto the mortgage term- if not more! Therefore, one should use the flexible mortgage responsibly if you wish to pay off your mortgage according to the original plan.

A variable rate on a flexible mortgage is the norm. Variable rates will fluctuate with the market, so you will always have a rate that is in check with inflation and economic conditions. Fixed rates are the better route if you think that the current market conditions are at the lowest point possible. In times where lenders are jumping over hurdles to get borrowers signed on, pushing for a fixed rate is easy.

If you have exceptional credit you might be able to apply for payment holidays as well. These “holidays” are simply payment periods in which you are able to skip. There are some limitations in how you can do such a thing, and how often, but it’s a great “Plan B” when money becomes scarce. Payment holidays also extend the life of the loan and the total interest paid, so use them sparingly if at all.

A good credit rating is required for flexible mortgages. That’s because flexible mortgage loans are so easily abused by those who have a poor history of responsible financial decisions. If you would wish it, you could get by only making minimal interest payments indefinitely. It might allow you to get by and have fun, but it would ultimately put you in more debt than you could imagine.

Closing Comments

When used correctly, the flexible mortgage loan has a great package to offer new families. You can go to a lender and get approved before you start your real estate hunt by calling in or using the Internet to fill out a mortgage application.

Learn more on Flexible Mortgages and Flexible Mortgages UK.

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