If you are concerned about paying a mortgage because you are self-employed, a flexible mortgage could be for you. Being self-employed has many rewards, such as being your own boss, but a downside is erratic pay: you can have a month or two without pay, and then the following month have lots of money.
A flexible mortgage differs from a regular mortgage as it allows you to make overpayments, underpayments and take payment holidays, subject to the mortgage agreement.
The flexible mortgage came from Australia in the early 1990’s, and in the mid 1990’s mortgage lenders realised it would be a perfect fit for many people in the UK who were self-employed, or for people who had irregular work and lifestyle patterns.
A flexible mortgage is now seen as an accepted form of borrowing and is well established in the mortgage market.
Benefits of a flexible mortgage:
– Regular overpayments can pay off your flexible mortgage early and potentially save thousands in interest repayments
– Pay in lump sums on an ad hoc basis
– Interest is calculated on a daily/monthly basis – with traditional mortgages, most banks and building societies calculate interest payments on an annual basis. At the end of each year, the mortgage balance is assessed and used to reset the interest payments. Daily or monthly interest calculations means less interest paid, and an earlier reduction of the mortgage balance
– Pay less than the normal monthly repayments
– Take a payment holiday – for example: if your flexible mortgage repayment is