Quality advice can provide flexibility

Many mortgage borrowers may feel that payment flexibility is a thing of the past, particularly given the tightening of lender criteria which has taken place since the credit crunch.

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There is certainly much less marketing focus on mortgage benefits such as payment holidays, perhaps because lenders are not that comfortable with those borrowers who might wish to take a payment break during the mortgage.

One suspects lenders often feel a payment holiday might be the first step on the rung to arrears and this is clearly not a positive ladder to begin climbing.

Payment holidays are still available, however, and while there is plenty of flexibility with loans such as offset mortgages, lenders are still offering flexible options as part of many propositions within their normal mortgage product range.

For example, part of the criteria that comes with the new Tesco Bank mortgage launch is the option to take a one-month holiday after six monthly payments. Some critics are suggesting it is not flexible enough as the borrower has to effectively apply for the holiday but for me I see little wrong. In fact, it is responsible practice for the lender to check out exactly why the borrower wants/needs the holiday.

In all this, there is perhaps a lesson for all on the benefits of gaining professional advice where the borrower returns to the adviser as well as the lender when their circumstances change. Indeed, if a borrower anticipates requiring such flexibility in the future, then their initial product selection is critical. The adviser can move down the flexible or offset product route, effectively factoring in overpayment and holiday options or look for more standard products with these options.

Once again, we can see the value of quality professional advice which is able to source such products rather than a narrow range of product choices offered by bank advisers. Clients may, however, need to be reminded that such flexibility is available and advisers are still in the best position to provide what they want.