Flexible mortgages
Introduction To Flexible Mortgages
The feature of a flexible mortgage from which they derive
their name is the ability to accelerate or slow down your
repayments to suit your lifestyle. This means that you can
take actions such as depositing your annual bonus into your
mortgage account to reduce your mortgage debt, or take a
payment holiday if you have to go on maternity leave, for
instance.
This aspect of mortgage products has been given broad
appeal by changing employment patterns that now seem to
favour short-term contracts and performance-related pay,
as opposed to the steady 'job for life' ethos that prevailed
in previous decades. People are now much more inclined to
take career breaks and almost half of all UK workers now
take home a variable amount of income each month. Many millions
of workers are also now getting some form of an annual bonus.
Flexible mortgages do not constrain people in such situations
to paying a fixed amount each month, thereby allowing them
to maximise or minimise their mortgage contributions depending
on their circumstances at the time.
Flexible mortgages may seem like a new phenomenon. In a
way they are, but some of the features that contribute to
a mortgage being called flexible have been around for years.
What is new, is that recently these features have started
to be combined into specific mortgages, which are then packaged
and marketed very much as lifestyle products.
They originated in Australia and first appeared on these
shores in mid 1990's, but by the start of 2002, there were
over 70 lenders offering flexible mortgages of one form
or another, the majority of which are either high street
or direct lenders. Flexible mortgages now account for somewhere
around a third of all new mortgage business.
As well as growing in terms of the number of lenders offering
such lifestyle products, flexibility has also broadened
in terms of their effect on other types of mortgage. While
'true' flexible mortgages are almost always found with variable
rates, some features of flexible mortgages can increasingly
be found with other mortgages. This is particularly the
case with tracker mortgages and increasingly so with discounted
mortgages and even non-conforming mortgages such as mortgages
for those with an impaired credit history, buy to let investors
and so on. All of this means that while lifestyle flexible
mortgages have established themselves as a mortgage category
in their own right, certain flexible features have now found
their way into mainstream products and changed the whole
face of the mortgage market.
