Borrowers Opting For Flexible Loans
The recent recession and effects of the credit crunch have changed many people’s attitudes towards borrowing money and in particular, the type of home owner loan or mortgage which they choose.
Prior to the credit crunch, the most popular option for a new home owner loan was usually a fixed rate loan deal, which offered the security of unchanging repayment amounts for an initial period of the loan, however, these can be quite restrictive if the borrower wants to make any changes, due to being tied into the same rate and conditions for a fixed term, or suffer early redemption penalties.
A new survey has found that borrowers have now moved away form fixed rate loans, partly due to the additional cost at the moment, but largely due to the fact that that the most important factor for a new loan amongst many individuals is now flexibility.
The survey, which was conducted by Lloyds TSB, found that around 68 per cent of those who were asked, now thought that flexible features were what they wanted from a new home owner loan, particularly after the economic conditions of the last twelve months or so.
A flexible home owner loan or mortgage allows a borrower to make overpayments, underpayments, lump sum repayments and payment holidays, without any penalties on repaying the loan, or part of the loan early. This can enable a borrower to repay their loan several years early, or to adapt their loan repayments if their personal circumstances should change.
Stephen Noakes of Lloyds TSB said “It is important for customers that their mortgage offers flexible features. Our research shows that customers want to have a greater degree of control over how much they pay and have the opportunity to flex payments dependant on economic conditions.”
