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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