What is Flexible Mortgage?

Full Definition

A flexible mortgage offers features that go beyond a standard repayment schedule, typically allowing penalty-free overpayments, underpayments, payment holidays and sometimes the ability to borrow back money you have overpaid. Some flexible deals are linked to a current or savings account in an offset arrangement, where your savings balance reduces the interest charged on the loan. The main benefit is control: overpaying reduces the term and total interest you pay, while underpayments or holidays can help during periods of lower income, such as self-employment or parental leave. Interest is usually calculated daily, so overpayments take effect quickly. The trade-off is that flexible mortgages can carry slightly higher rates or fees than the cheapest fixed deals, and lenders set limits on how much flexibility you get. Always check the specific terms, any early repayment charges and how overpayment allowances work before choosing one.

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