Most banks have similar mortgages in terms of collections, differing mainly in the interest rate they apply and whether it is fixed or variable. However, there are some mortgages in the market that are distinguished from the others by varying some of the basic conditions. They are what are known as flexible mortgages.
Some mortgages offer flexibility when making payments against the traditional ones. They can be very useful in case of difficulties of payment over the years, but in return they are sometimes more expensive
Mortgages are one of the financial products that the Spanish know best. According to the National Statistics Institute (INE), 28.5% of US families live in a building that is subject to a mortgage, approximately 5.15 million.
Mortgage is a complex financial product, a loan of a large amount of money for which banks demand a large amount of payment guarantees, in addition to requiring a series of payments. The most common: commissions of opening, deferral, subrogation, insurance and, of course, interest.
The term “flexible mortgage” can sometimes serve as a commercial claim, but is not a product in itself, but serves to refer to products that change some of the traditional elements of the mortgage. These are the most common flexible mortgages.
Balloon mortgages (with deferred capital)
Deferred capital mortgages are those that allow you to defer a portion of the loan until the end, instead of financing the full amount in monthly installments. In this way you can pay less each month, postponing a final payment that, when the time comes, can be faced in one way or another.
It is an interesting option if you know that in the future you will have an economic capacity more relaxed than at the time of requesting the loan, so you can save to pay this last installment or plan to sell the home. When the time comes, since most of the debt will be amortized, it will not be difficult to refinance this final installment.
Mortgage with flexible payments
There are several types of mortgages with flexible payments in the market, but they respond to the same scheme: to be able to defer payment of one or more installments in case of need, without entering into delinquency. It is a very useful tool especially in extraordinary circumstances like the time to face an unexpected expense or see altered source of income in some way.
The type and characteristics of the postponement depend on each particular product. One of the most common formulas is to defer payment of one of every 12 installments (one per year), to a maximum number of times throughout the life of the mortgage.
Mortgage with capital shortage
The lack of capital is the period of the mortgage in which only interest is paid, while the remaining capital to be amortized remains unchanged. During these periods, the fee to be paid is considerably lower, since the debt is not being repaid.
Some mortgages are flexible with this tool, and allow you to apply longer or shorter periods of capital deficiency, at certain times or leaving it to the mortgagee. It is a good tool to deal with complicated periods in which there are less income, but it has a clear double edge: during the months that are paid less you can avoid the default, but do not pay off the outstanding debt.
Choosing the right mortgage
There is no perfect mortgage. When it comes to hiring one you have to take into account a lot of factors, from the risk you want to take or the capital to finance up to the economic situation of each one. In addition, it must be taken into account that they are contracted in the very long term, and it is easy to last more than 30 years. That is why it is something that we must meditate carefully, because we will have to live a good part of life with it.
Flexible mortgages offer some advantages over traditional mortgages, especially in the event of unforeseen developments over the years. In return, they also pose some disadvantages. And these facilities often involve a higher interest.