A flexible mortgage is defined as a purpose-built mortgage where the parameters can be adjusted to a certain extent. Depending on the client’s current financial situation and needs, for example, the mortgage repayment can be postponed for a certain period of time, the amount of the regular monthly payment can be changed or an extraordinary loan payment can be made. Flexible mortgage is primarily a marketing name used by some Czech banks to appeal to potential home loan applicants.
Example of a flexible mortgage
The term flexible mortgage was used, for example, by Komerční banka. Owners of this mortgage could, for example, reduce their monthly repayments by up to 50 per cent over the course of the loan, interrupt repayments for up to three months, postpone the start of repayments for up to 12 months or pay off the mortgage early with a few high repayments.
Higher interest rates
Flexible mortgages have been particularly popular in the United States and the United Kingdom. In the Czech Republic, this mortgage has not gained many takers and today none of the banks offer it. Although the flexible mortgage offered a number of advantages over a conventional mortgage, it also had one significant disadvantage, namely a higher interest rate.