In This Article
What is a flexible mortgage?
When people talk of flexible mortgages, they are usually referring to mortgages that can be repaid without an early repayment charge.
For instance, most fixed rate mortgages have early repayment penalties on them if you are to exit them within the agreed fixed term.
The penalties on these mortgages vary. It is common for a 5-year fixed mortgage to have a penalty of 5% for the early repayment of the mortgage for the full 5 years.
People often take flexible mortgages to avoid such penalties allowing them to sell or refinance a property in the future without needing to factor in this large expense.
A reason why people may take these mortgages is for renovating the property to sell it again in the future.
For example, if you plan to buy a property to flip and have a mortgage with a penalty on it, this would eat into the profit margin when you come to sell.
A flexible mortgage may be a suitable solution allowing you to improve the property and sell it when it is finished.
A flexible mortgage will not always be suitable for you so make sure that you find a qualified and experienced mortgage adviser that can give you the individual advice that you need to ensure the product meets your requirements.
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Do all lenders offer flexible mortgages?
Not lenders offer flexible mortgages and it depends on the terms of the product itself.
Also, a flexible mortgage may be something that is offered for some time and then discontinued by the lender.
This is because lenders offer products for a certain amount of time and then withdraw them again replacing them with new ones.
Some lenders do not offer products that are penalty-free. Whereas there are lenders that seem to continuously offer penalty-free or flexible mortgages allowing you to repay them without a charge.
You should talk to a mortgage adviser that is up to date with lenders’ current products to find out what is available and what would be suitable for you in your situation.
Would a first time buyer get a flexible mortgage?
A first time buyer could get a flexible mortgage product being offered by a lender subject to meeting criteria.
Flexible mortgages are not limited to whether somebody is a first time buyer or not.
If a lender is offering a flexible mortgage product, and the first time buyer meets the criteria of that lender, that lender will offer the first time buyer flexible mortgage products following successful underwriting.
If you are a first time buyer wondering if your situation matches that of lenders with flexible mortgage products, find a mortgage adviser who can give you the advice that you need.
Do you get flexible mortgages for buy to let properties?
You do get flexible mortgage products for buy to let properties. Again, not all lenders offer these so speaking with an experienced buy to let mortgage broker would be advantageous.
However, many lenders do not offer flexible buy to let mortgages as they want borrowers to remain with them so they do not lose out on lost interest payments.
There are, however, a selection of lenders that can offer such products allowing the buyer to sell the buy to let property in the future should this be needed.
It is not uncommon for these lenders to decline the mortgage if they feel that it is the borrower’s intention from the outset to sell the property in the short term.
The reason that they do this is that I believe that short term finance should be taken rather than a standard term mortgage product. They offer a flexible basis allowing for circumstances to change rather than an intended buy and sell transaction.
Your mortgage adviser will know the correct mortgage for your situation and the criteria of the lender.
Do you get flexible mortgages for commercial properties?
Mortgage products change regularly so it is not possible to give a definitive answer.
However, most commercial mortgages are not flexible allowing you to repay them at any time.
Like buy to let and residential lenders, they do not want to lose interest payments on the loan they have issued.
As a result, many commercial mortgage lenders will tie you into the products for a certain amount of time so they do not lose money.
If you want advice about a commercial mortgage, you should look for a commercial mortgage broker with a background in transactions like yours.
Most commercial mortgage brokers will be members of the National Association of Commercial Finance Brokers (NACFB).
Can you get a flexible mortgage with bad credit?
It may be possible to apply for a flexible mortgage if you have bad credit. It will depend on the lender at the time and the products that they offer.
If a lender can offer a product for somebody with bad credit, that is flexible, in some circumstances, this may be a good solution.
The reason is, that it could potentially allow that borrower to borrow on an adverse product temporarily until they can refinance onto a prime product. This will be for an experienced mortgage adviser to confirm.
Bad credit comes in many different formats so speaking with a professional adviser would be wise.
If you want to learn more about your credit history and check your credit score your credit score, you can go to Check My File to sign up for a free trial. Other credit reference agencies are Experian, Equifax, or TransUnion.
An experienced mortgage adviser would be able to assess your credit report and match the adverse details with the criteria of a suitable lender.
Not all lenders offer adverse credit so it would not be possible to expect a flexible mortgage product in all circumstances. This is where a qualified and experienced broker is worth their weight in gold.
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Would a bridging loan be considered a flexible mortgage?
A bridging loan could be considered a flexible mortgage in the sense of it is the first charge and does not always have a fee to repay the lender.
This does however vary upon the lender and the product so talk to a bridging loan adviser that can confirm this.
Many bridging loans allow you to improve a property as necessary and then repay the bridging loan when you have an exit strategy.
This could be the sale of the property or even a refinance to a standard mortgage product.
If you plan to take a bridging loan, you should always make sure that you are clear on the repayment method. The reason is, that bridging loans are expensive so being stuck on a bridging loan is dangerous.
An experience bridging loan adviser will be able to give you your options telling you whether there is a suitable repayment strategy available.
Do you need a special type of mortgage broker for a flexible mortgage?
You do not necessarily need a certain type of mortgage adviser to get a flexible mortgage product.
It is however always important to look for a mortgage broker that has relevant experience to your situation.
Standard lenders usually offer flexible mortgage products requiring no extra specialist knowledge.
If, however, you have a complex situation, it would be worth finding a mortgage broker that has completed transactions similar to yours in the past. They would be able to tell you which lenders are available to you.
From there, they could look for a mortgage product that has flexible terms allowing you to repay them when you’re ready to.
It is certainly possible to find flexible mortgages that allow you to repay them without an early redemption penalty.
The mortgage market though is, however, a minefield so make sure you find a broker with plenty of experience relevant to your transaction.
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