Flexible Self Certification Mortgages
Flexible Self Certification Mortgages | Giving You More Control
What are flexible self certification mortgages?
Flexible self certification mortgages are a new type of homeloan that allow borrowers to control their own finances. With flexible self certification mortgages you have more say about what you pay into your mortgage account and when.
Flexible mortgages came over to the UK over a decade ago from Australia where they are very popular. In the past mortgage lenders would dictate the level of monthly payment and the way interest was calculated. But flexibility changed all this.
Flexible self certification mortgages allow borrowers to overpay when you have the funds, underpay when money is tight, or even borrow back money if you have a large expense to cover. Different products vary and conditions apply but in the main flexible self certification mortgages allow you to be more, well, flexible about your payments.
Flexible self certification mortgages are designed for those who may find it hard to prove their income,for any number of reasons, and these people tend to benefit the most from flexibility. For example, you may find it difficult to prove your income because it is commission based and so varies from month to month.In this case flexible self certification mortgages would be worth considering as they allow you to pay more off your mortgage in a good month and less in a bad one.
Self employed borrowers can benefit massively from flexibility, again because of variable income but also because they will have a large tax bill to pay once a year. Before this is paid to the tax man it can be working hard in your mortgage account reducing your debt and therefore the interest you have to pay. And this is the main advantage of flexible self certification mortgages - because interest is calculated daily or monthly, rather than annually, any payments you make reduce your debt straightaway - and therefore the interest you are liable to pay. All this saved interest adds up and flexible self certification mortgages can save you thousands of pounds and years off your term*. Savings can also be placed into the mortgage account to reduce your debt and accessed again when needed, depending on the deal.
All in all flexible self certification mortgages allow your money to work harder for you and enable you to have more control about how your repay your homeloan.
*Source Barclays Bank: Calculation based on an offset tracker product; repayment mortgage of £100,000 over a 25-year term that has been offset with £20,000 savings, resulting in a reduction in mortgage term of 8 years and 8 months or a saving of £44,867 in overall interest. Calculation assumes balance remains constant throughout the life of the mortgage and that the mortgage loan and savings balance will vary. Outcomes will be either a reduction in payments or a reduction in mortgage term. No interest is paid on balances offset against the mortgage. Typical rate is 6.45% (variable). The overall cost for comparison is 6.7% APR.
