If you get a fixed interest rate mortgage, you will usually have to pay a fixed amount of money each month.
On the other hand, when you get an adjustable rate interest mortgage, you may be able to take advantage of some different kinds of repayment options.
In particular, you may be interested in flexible payment mortgages.
What are Flexible Payment Mortgages? Basically, this type of mortgage works a bit like the repayment options on a credit card.
You can pay a minimal amount each month that will cover interest accrued on the mortgage.
Alternatively, you can select higher amounts that will help reduce the principal amount of the loan faster.
A scenario to consider If you have a 30 year mortgage, making use of the highest payment option may allow you to pay the loan off in 15 years.
On the other hand, if you lose your job, you can elect to pay only the accruing interest each month until your finances improve.
The loan amount is recalculated every five years in order to make sure that your payments will be completed within the contracted amount of time.
Times when Flexible Payment Mortgages may be of use Individuals that are insecure in their job, or take part in seasonal labor may find that this type of mortgage will be of some help.
At the very least, if you can make smaller payments when money is tight, it will help you to avoid foreclosure.
Once you begin making more money, then you can always regain the ground you lost by making use of higher payment amounts.
When you are thinking about applying for a mortgage, you should never assume that someone will help you stave off foreclosure.
In some cases, if you can negotiate flexible payment terms at the beginning of the mortgage it may help you avoid all of these problems.
While you may wind up with less equity in your home because of lower payment amounts, at least you can still keep moving toward the goal of owning your home free and clear the balance at some point in the future.
Depending on your finances, making use of a flexible payment arrangement may also make it a bit easier for you to get rid of other financial millstones instead of rolling them into a debt consolidation loan.