What is a Flexible Mortgage?

Written by John Mussi


'Flexible mortgage' is a term that's used a lot, but what exactly does it mean? A flexible mortgage allowsrepparttar borrower to make extra repayments when they haverepparttar 143944 extra money and even reduce or skip payments shouldrepparttar 143945 need arise.

A flexible mortgage allows you to make extra payments to reducerepparttar 143946 amount outstanding on your mortgage thereby reducingrepparttar 143947 interest you're paying or pay off your mortgage earlier than planned.

Imagine being able to save money in mortgage interest, or borrowing enough money pay off your credit cards or personal loans, or buy a new car at a low rate of interest. That's exactly what flexible mortgages enable you to do.

Flexible mortgages allow you to save money by cuttingrepparttar 143948 length of your mortgage term. You can also buy yourself more time when money is tight by reducing your monthly repayments or increase you mortgage if you need to borrow money.

'Flexible mortgages', also known as 'Australian mortgages' are fast becomingrepparttar 143949 most popular way of taking out a new mortgage.

Flexible mortgages are designed for people who wantrepparttar 143950 option to vary their mortgage payments to match changes in their cash flow. To varying degrees, they let you underpay, overpay, take payment holidays, pay off lump sums and borrow back overpayments.

Flexible mortgages come in various guises but they mainly allow you to make extra lump sum payments, borrow back money, allow you to take repayment holidays and also allow you to make underpayments. Some flexible mortgages will double up as a current account, where your salary is paid in monthly and so you are in effect paying off a huge overdraft.

Unlike some traditional loans that still charge mortgage interest on an annual basis, fully flexible mortgages calculate interest daily, which means that any overpayments you make are immediately credited against your loan, thus reducing your interest costs. This gives yourepparttar 143951 flexibility to manage your mortgage payments to suit your cash flow needs as your circumstances change.

What is an Offset Mortgage?

Written by John Mussi


An offset mortgage is very similar to a current account mortgage - but instead of having everything all in one account, all accounts are held separately.

The offset mortgage concept treats your money as one giant pot, with each element (mortgage, savings, current account etc) separate torepparttar rest. The result is basically a giant overdraft, although it behaves differently.

Offset mortgages are whererepparttar 143943 interest on your mortgage is reduced byrepparttar 143944 funds in both your savings accounts and your current accounts. The more you have in your savings account,repparttar 143945 less interest you pay on your mortgage, which helps you to repay your mortgage faster and more cheaply inrepparttar 143946 long term. Your part ofrepparttar 143947 deal is that you don't receive any interest on your savings or your current account.

The interest is work out by takingrepparttar 143948 state of each account separately and offsetting them againstrepparttar 143949 others so that you can benefit from your savings and pay less interest. A current account mortgage allows you to benefit inrepparttar 143950 same way, except it also acts a bank account so your salary goes intorepparttar 143951 same account that your mortgage is in.

This is slightly different torepparttar 143952 current account mortgage because your mortgage account is separate from a savings and income account that you open withrepparttar 143953 same company. Likerepparttar 143954 current account mortgage, your income and savings are offset against your mortgage, which reduces what you owe. The interest is calculated on a daily basis on that reduced balance.

Offset mortgages work by settingrepparttar 143955 money held in savings and current accounts against your mortgage debt. So instead of earning interest on your cash balances, you pay less interest on your borrowings. The idea of offsetting is that, with less interest to pay,repparttar 143956 mortgage is paid off more quickly and as a result costs you less.

Some of these mortgages can even be linked to your other personal financial commitments and arrangements. One ofrepparttar 143957 main attractions of these mortgages isrepparttar 143958 prospect of paying less interest.

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