Flexible Remortgage

A flexible remortgage may be the ideal solution if you have an unpredictable income. Making regular monthly mortgage repayments can be challenging when your income varies dramatically over the course of the year. A flexible remortgage, also known as a lifestyle arrangement, accommodates borrowers who may earn a large lump of cash one month, and only a few quid the next.

As the remortgage industry grows more competitive, lenders are offering a wide range of valuable remortgage deals. Along with the more traditional discounted, fixed rate, capped and tracker remortgages, some banks and building societies now offer flexible deals that have fewer requirements and restrictions than most conventional remortgages. Because the terms and conditions of a flexible remortgage can vary considerably among lenders, it pays to compare your options by contacting a number of lenders to secure the deal that fits your lifestyle.

Advantages of a Flexible Remortgage

One of the primary advantages of a flexible remortgage is the ability to make higher repayments when you have a lot of cash to hand. If you are employed as a contractor, work on commission, earn large bonuses or make most of your money during certain seasons, the prospect of overpaying your remortgage loan can be very appealing. Instead of penalising you for making higher repayments at certain times of the year, a flexible remortgage facilitates this practice by allowing you to take payment holidays when you're short on funds.

When you're having a cash flow problem, you may be allowed to take a payment holiday of 1 to 2 months, which will give you time to restore your income. In order to qualify for a payment holiday, you must generally make overpayments ahead of time. For instance, if you pay twice your monthly repayment in January and February, you may qualify for a payment holiday in March. You may also have the option to make reduced payments rather than skipping a bill altogether.

Flexible deals are relatively new to the remortgaging industry. These versatile loans often appeal to working professionals who earn large bonuses throughout the year, or who change jobs every few years or so in order to increase their income. With a flexible arrangement, you can apply bonuses and raises to your mortgage, which may shorten the repayment period and reduce the overall cost of your home. If you wish to shorten the term of the loan, check with your lender about any penalties that may apply if you pay off the mortgage early.

Lifestyle Remortgage Considerations

Before you accept a remortgaging agreement, review the repayment terms carefully. Some lenders allow you to take a holiday only if you have overpaid enough to make up for the skipped payment. Others may restrict you from taking a holiday until you have repaid the loan for a certain period of time. Early repayment fees may apply through some lenders if you finish paying off the loan before the end of your contract, or if you decide to switch lenders during the course of your contract in order to obtain a better deal.

In exchange for the adjustable payment arrangements of a flexible deal, you may pay higher interest rates. A flexible remortgage is unlikely to include the promotional discounts that more traditional loans offer. If saving money is a key concern, you may want to consider whether the flexibility of a lifestyle arrangement is worth the higher interest rates. A discounted loan, which offers a variable deal at a lower rate, may be a better option if you're extremely cost conscious.

A flexible remortgage can give you more financial freedom as a borrower, but you must be confident that you can meet your financial obligations. Whilst it's typical for professionals in finance, sales or other industries to be paid by commissions and bonuses, many employees can't count on financial windfalls. Accepting a lifestyle remortgage in anticipation of a variable income is appropriate in some circumstances, but it you're uncertain about your employment in the future, you may want to consider a more affordable, stable arrangement.

When you're shopping for a flexible deal, be aware that many lenders describe their remortgaging arrangements as flexible in order to attract borrowers. The use of the term to describe a loan may be strictly promotional. A genuine lifestyle remortgage offers specific terms, namely the option to vary your repayments as needed without incurring penalties.

Flexible remortgage arrangements can be perfect for borrowers who can rely on earning a certain income, but who earn that income sporadically throughout the year. Compare quotes from several reliable lenders to find a deal that accommodates your lifestyle. Look for a trusted, FSA regulated lender that has a solid reputation for providing versatile, adjustable arrangements to borrowers like you.