Among the different types of mortgage, the flexible loan is backed by a traditional amortizable loan. Offered by a majority of lending institutions, it allows the borrower to anticipate the evolution of his income in order to manage his monthly payments with more flexibility. In short, it is a customizable loan offering many advantages for the subscriber.
How does the flexible loan work?
We talk about a flexible loan, but it is more an option backed by a conventional mortgage than a loan in its own right. This option allows a subscriber to obtain a credit, the repayment terms of which may change according to changes in his finances.
Few borrowers can secure a fixed and identical income during the entire mortgage amortization period. In 15, 20, 25 or 30 years, a lot can change: income can go up or down, unexpected cash flows can occur, the subscriber can go on a period of unemployment, etc.
The modular home loan adapts to the borrower’s situation: the borrower can modify his monthly payments according to his income. This flexibility constitutes the DNA of the modular loan, depending on the conditions set between the subscriber and his bank when the loan offer is issued, on a case-by-case basis.
What can we do with the modular home loan?
Concretely, the modular loan allows:
- Increase or decrease the amount of the monthly payments to adapt to a change in economic situation (sudden rise or fall in income, significant cash inflow, etc.);
- To suspend monthly payments for a short period to compensate for a temporary difficulty, such as a job loss (the total reimbursement period being limited to an extension of two years);
- To repay the modular home loan in advance, in part or in full. This type of repayment is provided for in loan contracts but is often subject to penalties. A borrower who anticipates large cash receipts can nevertheless negotiate the possibility of an early repayment without costs, for a limited amount.
Generally, financial institutions offer a flexible loan option to borrowers, because they are aware that a loan of this size must take into account the vagaries of life (reason for which borrower insurance, if it is not a requirement is still a constraint in fact).