Flexible / Lifestyle Mortgages

Flexible, or 'lifestyle', mortgages allow you to vary the amount you pay each month. If one month you find you have the money to repay a little extra, then you can do so. Conversely, if you feel you cannot make a repayment one month, you may be able to take a 'payment holiday'. This gives you the opportunity to stop paying off your mortgage for a month or two while you rectify your cash flow problems. You are usually only able to take a payment holiday if you have overpaid in the past, which effectively covers the missing repayment.

The advantage of a flexible mortgage is that if your finances improve, you are able to overpay and repay your mortgage early. This reduces the overall cost of your mortgage because the interest charged over the term of the mortgage is lower. Many mortgage providers charge an Early Repayment Fee however, if you repay your mortgage early; ensure that you consider this charge before making a decision, since it could reduce the overall benefit.

Most flexible mortgages calculate interest daily, which means that any overpayment you make goes towards repaying your debt immediately and the overall interest charge is thus less, since interest is calculated on the total amount you owe rather than the total amount you borrowed.