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.
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YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS. The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
What is a flexible mortgage?
A flexible mortgage is designed to give you more control over how you make your mortgage repayments.
Depending on the lender, it may allow you to make extra overpayments, pay off chunks of your mortgage early, or vary your monthly payment amounts.
Because features can differ between providers, it’s important to check the details to see if a flexible mortgage suits your needs.
How to compare flexible mortgages
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How do flexible mortgages work?
This table summarises the main features lenders may offer, though the exact options vary by provider.
| Feature | How it works | |
|---|---|---|
| Overpayment | Pay more than your standard monthly amount to reduce your balance faster and lower total interest, though limits may apply | |
| Underpayment | Pay less than your usual monthly amount for a period, typically only if you’ve overpaid before | |
| Payment holidays | Pause repayments for a set time, but interest continues to build, increasing the overall cost | |
| Drop-lock | Switch from a tracker mortgage to a fixed rate without early repayment charges or remortgaging | |
| Borrow-back | Access money you’ve previously overpaid if you need extra funds | |
| Daily interest | Interest is calculated daily, so overpayments can reduce the amount charged more quickly |
What mortgages can I get with flexibility?
Flexible repayment mortgage
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 mortgage
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.
Flexible fixed-rate mortgage
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 by more than a certain amount before your deal ends.
Flexible tracker mortgage
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.
What mortgages can I get with flexibility?
Flexible repayment mortgage
Flexible offset mortgage
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.
Flexible fixed-rate mortgage
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 by more than a certain amount before your deal ends.
Flexible tracker mortgage
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.
Advantages and disadvantages of flexible mortgages
More freedom to overpay, underpay or even take a break from mortgage payments
Ideal if your income fluctuates, for instance, if you’re self-employed
Can help you pay off your mortgage more quickly and save money
Flexible mortgages typically have higher interest rates compared to standard mortgages
Different lenders will have different restrictions and terms and conditions
There will likely be limits on how much you can underpay and overpay
How to choose the best flexible mortgage
When comparing flexible mortgages, it’s important to consider which features would be most beneficial to you.
For example, if you’re considering a tracker mortgage, you might want the security of a drop-lock feature to switch to a fixed rate if rates rise. If your income varies, a flexible mortgage with overpayment and underpayment options could give you the breathing room you need.
Once you’ve decided on the features you need, compare mortgages to ensure the one you choose is suitable. Make sure to consider not only the rate, but also the mortgage term, how much of a deposit is needed and the fees involved.
Make sure you also check the terms, conditions and restrictions. These vary by provider, which is why it’s important to find the mortgage that best suits your circumstances.
Important limits to look for include:
Minimum monthly repayments - you can't pay less than this each month
Maximum repayment limits - the most you can overpay each month or year
Interest charges - if you take a mortgage holiday, interest will still be charged, your minimum repayment amount may increase after the break
Mortgage holiday requests - are not honoured unless you specifically request them
By weighing these factors, you can find the flexible mortgage that fits your budget and lifestyle.
Flexible mortgages FAQs
Are flexible mortgages more expensive?
Flexible mortgages can be more expensive than standard deals because lenders often charge higher rates or fees for the added flexibility. But if you make overpayments or use features like payment holidays wisely, you could save money overall.
Speaking to a broker like Mojo Mortgages can help you compare options and find a flexible mortgage that suits your needs and budget.
Will I be credit checked if I apply for a flexible mortgage?
Yes, your credit rating will be considered when you apply. The better your score, the more generous offers you’re likely to get. If your rating is low, you may struggle to find a lender that will approve you. To find out more, read our guide on how credit scoring works.
Can I switch my standard mortgage to a flexible mortgage?
Possibly, it depends on your provider. It’s best to contact them to check if this is possible. Alternatively, when your current deal ends, you may be able to get a flexible deal if you remortgage.
Can I still incur fees if I over or underpay?
Yes, you may be charged if you breach your provider’s minimum and maximum repayment limits. Make sure you check the terms and conditions carefully to avoid being stung.
Can flexible mortgages be managed online?
Yes, many flexible mortgage lenders allow you to manage your mortgage online if you are registered for online banking.
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