Flexible & Current Account Information

 

Flexible and Current Account mortgages are a relatively recent phenomenon in the mortgage market and have been introduced to cater for the changing patterns in working and life styles. One of the most attractive features is that these types of mortgage allow overpayments. If you decide that you wish to pay off a lump sum you can do so and by doing so you reduce the interest. This can make quite a big difference to how much you pay in interest over the course of the mortgage and allows you to pay the mortgage off early if you wish. You can also generally draw down overpayments should you need the money you overpaid at a later date.

 

Current account mortgages and offset mortgages group together your borrowing and saving. This means that all your borrowings are at the mortgage rate, which is usually considerably less than personal loan and credit card rates. Usually you would have your savings and current account held in this type of mortgage and your salary paid into it. This means that as interest is calculated daily you only ever pay interest on the amount you owe.

 

Advantages:

 

Daily interest

 

Overpayment facility- potential to reduce amount paid in interest and reduce the term

 

Underpayment facility- particularly useful in times of hardship/unexpected expense

 

Current account mortgages give good rates of interest on borrowings and savings

 

Current account mortgages ensure your interest payments are kept to a minimum

 

Disadvantages:

 

These mortgages need to be managed carefully to take advantage of the benefits- this makes them less attractive to people who do not want to have to think about their mortgage on a day to day basis.

 

This type of mortgage could encourage people to overstretch their borrowing