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Find out your options with a flexible mortgage

The flexible mortgage is a relatively new mortgage product. It is quite hard to define because it depends on what each individual mortgage lender offers.

All flexible mortgages do have certain characteristics; the borrower can make overpayments towards their mortgage without any penalty, the borrower can underpay as long as the lender agrees, there is a facility to take a payment holiday as long as the lender warrants it and interest is calculated daily.

The mortgage lender will usually set out its terms for repayment holidays and underpayments although they can often be negotiated. Other options are available other than the ones described such as the facility to have a chequebook which allows the additional amounts to be borrowed and added to the mortgage as a further advance. The lender will put a limit on what additional amounts can be added to the mortgage, usually the lending limit will not exceed 75% of the loan to the value of the house.

A type of flexible mortgage now offered is a current account mortgage. This type of mortgage acts in the same way as current bank account where all direct debits and salary payments are paid in the one account, a cheque book can be used in the same way and the lender will probably offer this facility as part of the account.

The main benefit is that because interest is worked out daily it will take into account any salary credits that have been put into the account resulting in a considerable amount of savings on the interest paid over the whole term of the mortgage. There is also the simplicity of having all financial transactions taking place from the one account.