Flexible mortgages

This allows you to pay more than your standard monthly repayments. This can help you clear your mortgage more quickly and reduce the amount of interest you pay overall. Check whether there are any limits on how much you can overpay as you may be charged if you exceed these caps.

A lender may agree for you to pay less than the standard monthly amount for a set time. Lenders usually only allow this if you have overpaid previously. 

Some lenders allow you to take a break from making monthly payments for a set time, usually between one and six months. Remember that interest will continue to be charged while you’re taking a break, so you’ll pay more over the total term of the mortgage.

If you have a tracker mortgage, a drop-lock feature lets you switch your mortgage to the security of a fixed rate without paying any early repayment charges or remortgaging to another lender. 

A  borrow-back feature allows you to withdraw the money you’ve previously overpaid if you need it. This handy option means you can save on interest payments and use your flexible mortgage as a type of savings account.

With this element, the interest you owe is calculated daily, so any payments you make are taken immediately into account. It’s much cheaper than other ways of calculating mortgage interest, such as monthly or yearly. If you overpay, for instance, your interest payments will drop straight away.

Most mortgages are repayment mortgages: each month you pay back some interest as well as a portion of the original loan. By the end of the mortgage, you have paid back the whole debt, including any interest in full.

Flexible offset mortgages use your savings to offset the interest you pay on your mortgage. For example, if you have a mortgage balance of £150,000 and £20,000 in savings, you will only be charged interest on £130,000.

With a flexible fixed-rate mortgage, your interest rate and monthly repayments remain the same for a set time, usually two, three or five years. Fixed rates are usually more expensive, but you get certainty in return. When the fix ends you can remortgage, or move your lender’s standard variable rate (which is often expensive). Typically, a fixed mortgage will have fees attached if you want to overpay.

A tracker mortgage follows movements on another financial indicator, most often the Bank of England base rate. Your rate, plus your monthly repayments, can go up and down. However, if your tracker mortgage includes a drop-lock feature, you can switch to a fixed-rate at any time.