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Mortgage Underpayments is one of the features offered by most Flexible Mortgage products. It is a facility that allows you to underpay the amount of your regular mortgage instalment, subject of course to the terms and conditions permitted within the mortgage contract.
Here we take a closer look at Mortgage Underpayments and how they work, together with details of how Shire Direct can help with a Flexible Mortgage product that features an Underpayment facility.
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'So, what is a Mortgage Underpayment exactly?' you might well be asking. Well, Mortgage Underpayments are just one of a number of features offered by most Flexible Mortgage products that allow you to underpay the amount of your regular contractual mortgage instalment (subject to the terms and conditions permitted within the mortgage contract).
How does the Underpayment feature of the Flexible Mortgage product work? Well, it varies from lender to lender, but most Flexible Mortgage providers will give you the option to reduce your monthly repayment, or even miss monthly payments altogether (which could also be considered as taking a payment holiday).
Of necessity, most Flexible Mortgage lenders will restrict how often you can underpay, and how much you can underpay by. Here are some of the restrictions that may be imposed:
Lenders will generally impose the borrower with a pre-set maximum lending limit. Not to do so, would mean the mortgage balance would continue to increase without limit!
Nevertheless, the underpayment facility can be especially useful when expenditure may be abnormally high, for example a new addition to the family; or when income could be abnormally low, such as the loss of overtime, or even temporary unemployment!
However, you should bear in mind that underpaying your mortgage will increase your mortgage balance, and you will be paying interest on interest during the time you underpay.
Although there's no strict definition of a flexible mortgage, most flexible mortgage products will feature some or all of the following to enable you to:
So, it's quite clear from the above list that many of the features contained in a flexible mortgage can be very beneficial and may well help to facilitate your longer-term goals. For instance, the ability to make overpayments on your mortgage will mean that you will be charged less interest and will enable you to repay your mortgage quicker, although if you do need access to funds urgently, the flexible mortgage will usually provide access to your overpayments, or enable you to underpay for a period of time.
There are a few drawbacks to a Flexible Mortgage that need to be taken into account. For instance, the lender's arrangement or plan fees may be higher than with a standard mortgage, and you won't usually get the advantages of a low fixed rate, or long-term discount.
To use a flexible mortgage to its optimum, you must be able to control your finances in a disciplined manner, otherwise, you could be tempted to borrow more or underpay when it's not really necessary.
You should also be aware that if you are using the flexible mortgage to borrow more, your borrowings are secured against your home, and in the event of default, your home will be at the risk of repossession. And although your borrowings may be at a low rate over a long period, this can cost you more than borrowing at a higher rate over a shorter term!
Yes, of course!
A quick call to one of our qualified mortgage advisors, and we'll carefully assess your circumstances, aspirations, needs and requirements. We'll also help you to determine you priorities. You'll find a warm welcome awaits you and we're confident you'll find our approach to be slick and professional.
We'll explain the complexities of the schemes available to you, in a language you can understand. Furthermore, we can usually help even if you've experienced difficult circumstances in the past, and even some of our Adverse Credit Mortgage schemes can incorporate a degree of flexibility.
Like to know more? Then simply Contact Us. You can call us on Freephone 08000 282 281, our lines are open everyday (including weekends) until 10pm, and you can also enquire online at any time if you prefer. In either case, we'll be more than happy to provide you with a fast in-principle decision - whatever your circumstances!
So, that concludes our look at Mortgage Underpayments and how mortgage underpayment works, we hope you found it useful! Don't forget there is much more useful information throughout our website, and that we're only ever a couple of mouse clicks or a free telephone call away, and would love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
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