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Flexible Mortgages....

The term flexible mortgages refers to the flexibility within the debt. For example can overpayments be made without the lender charging penalties.

The term true flexibility can go to any mortgage that offers over payments and under payments without any further charges, with the ability to extend the borrowing with possibly the facility of a cheque book.

The original flexible mortgage came from Australia and obviously was know as the Australian mortgage for that very reason. The main reason the Australians invented this type of mortgage was many people over there wanted the facility to pay off chunks of their mortgage and as such save money and then in turn repay their mortgage earlier than they had originally set out to do. All this had the effect of saving considerable amounts in interest payments.

The example of this can be clearly seen from the diagram below. Please note the graph below is not accurate and is for illustrative purposes only:-

Here in the UK a lot of lenders purport to have a flexible product of some sort but some lenders have products that are far more flexible than others. Some lenders deem a product flexible if they just offer the ability to take overpayments without penalties but this is not much use if you need to get the benefit of those overpayments by way of a payment holiday and the lender not allowing you this facility.

With all this in mind it is very important that if you require flexibility you decide what aspects of flexibility you want and make sure that your mortgage product truly offers those aspects without additional charges. As to fail in this respect could hold you into a costly and restrictive mortgage.

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