Is Flexibility the way forward?

Steve Weisner - Independent Financial Adviser Radcliffe & Newlands

Flexible mortgages seem to be the product of the moment in property. As they recalculate your interest rate daily (rather than monthly or even annually) they reflect your borrowing perhaps more accurately than traditional loans.

The main benefit from flexible mortgages is your ability to reduce your loan more quickly. If you make a repayment to capital today, that payment is reflected in reduced interest charges immediately, not deferred until a future date when the bank get round to it. For these reasons, they can be a particularly good idea for those who receive a healthy bonus every year or for the self employed whose unpredictable income levels can mean they sometimes want to over pay, but sometimes need a payment break.

The alternative to just a flexible mortgage is having it offset as well. An offset mortgage is arranged in conjunction with a bank account, and in some cases a savings account and/or loan.

The main benefit lies in the ability to 'offset' credit balances on a current account and savings account against the mortgage, with interest calculated on the net amount owing.

The other advantage is that the interest paid on your loan will be at the same interest rate as your mortgage, which is typically lower than the interest rate of a separate loan.

With an offset mortgage you keep the balances for your mortgage, current account and savings in separate accounts (with the same provider), but all balances are still offset against each other. This means that the credit balances reduce the mortgage amount on which interest has to be paid. Therefore it's easier to manage the separate accounts.

For example, if you owe £150,000 on your mortgage, hold £4,000 in your current account and £12,000 in a savings account, the overall balance is £134,000, so you only interest on the £134,000 balance.

To find out you could reduce your monthly mortgage repayments, please speak to Steve where he'll be happy to help you.

Steve Weisner
Independent Financial Adviser
Radcliffe & Newlands
5th Floor Crystal Gate
28-30 Worship Street
London
EC2A 2AH  

Tel: 020 7382 0437
Fax: 0207 374 0462
Email: SWeisner@myeggnest.com
www.rad-new.com

If you have a question or if you would like to discuss becoming a client with Radcliffe & Newlands then do please complete the very short form on the right hand column of this page.

You will usually get an answer within 24 hours except during the weekend or bank holidays.

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