Features

The most common and probably the most effective feature of a flexible mortgage is linked to the interest calculation. I would expect the majority of flexible mortgages to calculate interest on a daily basis so any overpayments or underpayments are affecting the amount interest payable.

Don’t forget some of the above features are available on standard mortgages so I would suggest making a list of the essential features first and then sourcing a conventional mortgage on those terms.

Conventional mortgages often allow you to overpay or underpay upto 10% of the outstanding mortgage every year.

Mortgage Flexibility

Flexible mortgages all have a selection of different components but generally include daily calculations plus under and over payments facility and also a holiday whereby payments may be stopped for a given period of time.

These mortgages were subject to high interest rates but now are offered by some lenders across the product ranges.

An offset mortgage allows the borrower to use savings against the mortgage, i.e. if a mortgage was for £100,000 but the borrower had £10,000 of savings then interest would only be payable on £90,000.

This type of mortgage may come with slightly higher rates and therefore savings would need to be in the region of 10% of the mortgage value for this product to work effectively. Interest would not be paid on the savings but mortgage rates are usually higher so that would not really be a problem. Interest would be calculation daily so savings are immediately used against the mortgage. Lenders are now offering a variety of products from around 6% for an offset mortgage.

A further benefit is that because no interest is paid on the savings no tax will be payable either.

A few lenders will also offer loan facilities plus credit cards and current accounts can be linked to the mortgage. Credit card debit is charged at the mortgage rate and current accounts can be used against the mortgage. To get the best from this product money needs to be left in the account and long as possible so direct debits should be taken from the account and the end of the month.