An adaptable mortgage

There’s a lot of talk about re-mortgaging at present. If you’re settled into your mortgage, you may think that it’s too much trouble and not for you, but it’s something that maybe you ought to consider. Unless your mortgage is minimal, there should a saving to be made.

It’s not necessary to remain faithful to your bank or mortgage company. Just because you’re signed up to a mortgage, it doesn’t mean you have to stay with it until the end of the agreement. You’re free to pay off your existing loan and take out a replacement one with a new lender whenever you choose to.

The chief reason for remortgaging is to save money by reducing your mortgage costs. Lenders frequently offer tempting and attractive new deal for new borrowers, leaving their existing customers paying higher interest rates.

Some of the newer style mortgages are much more flexible. In fact there is a product called a Flexible Mortgage available, designed to allow you to over or underpay or even miss payments for a period. This may fit in with your lifestyle, particularly if you are self employed, involved in contract work or receive bonuses regularly.

There are two variations on the flexible mortgage – one is called the offset and the other one is a current account mortgage.

 Offset mortgages permit customers to mix their savings and debts, which enables them to reduce amount of interest owed. The offset version is savings linked whilst the current account one offers full banking facilities.

Offsetting means that you can reduce the length of the loan by overpaying. You are charged less interest by offsetting your savings against the amount of money you’ve borrowed.

These mortgages have higher rates then some of the mortgages around – such as the better value fixed rate and discount mortgages – usually they’re about 0.75% higher. Those will a modest mortgage and a generous salary can achieve a reasonable saving in the interest owed. For those with smaller amounts of savings or using current accounts for offsetting, it may not be as financially advantageous and they make be better off negotiating a more traditional mortgage with lower rates.

With some of the deals, it’s possible to take out extra amounts, maybe to fund repairs, alterations or even for a holiday, at the mortgage rate. This avoids the higher interest rates paying with personal loans or credit cards. Normally, you would be given a reserve limit. This could be higher than the original loan. Generally, borrowers would be able to borrow up to 90% of their property valuation figure.

Current account mortgages, which include full banking facilities, are not a common as offset ones but have the advantage of being truly flexible. This means borrowers can combine mortgage, salary, loans, savings and credit cards. Money paid in, including interest earned on balances, can be credited to the mortgage. This reduces the debt and results in lower interest charges. Lenders say that by using this method many people will be able to pay off their mortgage early and big savings should be made.

Discipline is essential with a current account mortgage. Your home is at risk if you run into problems with your payments as any loans are secured by the value of your home.

There are so many different types of mortgage on the market, it would be impossible to list them all. There is almost certainly one out there for you, whether it is a simple interest only one, (almost certainly at a much more advantageous rate than the one you’re on) or something more sophisticated. The easiest way to get some advice is to log on to the internet. An on-line broker will be able to help you with advice on mortgage types and the latest deals. You’ll be offered a variety of options and there are some excellent internet deals.

The sooner you contact them, the sooner the savings start. Don’t delay.