Flexible, Offset, Cashback & ERC’s
Some mortgages allow you to vary payments for periods of time. You could also make overpayments to help pay your mortgage off early. You may have the facility to take payment holidays or borrow money back to help you get through an expensive period.
Some schemes allow you to ‘offset’ savings against the mortgage to reduce the amount of interest payable, others incorporate current accounts, savings accounts and credit cards.
Some of these schemes can be very complicated and it can be hard to keep track of the overall payment schedule. You should think carefully whether a mortgage of this nature is suitable for you before taking one out. It is often possible to get a cheaper pay rate by taking an alternative type of scheme.
Occasionally lenders offer smaller cash back schemes in combination with other rates i.e. discounts or fixed schemes.
Early repayment Charges (ERC’s)
Most schemes will have early repayment charges attached to them which mean if you do not keep the mortgage under the agreed scheme, for a specified period, then a penalty or ‘early repayment charge’ would become payable.
These charges are often expressed as a percentage of the loan being repaid and as such can run into thousands of pounds.
This is one aspect we will cover with you when shopping around for a suitable scheme.