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About Flexible Mortgages

Flexible mortgages can offer more leeway than standard mortgages, such as options to make overpayments or port your mortgage when you move home. Just choose your type of borrowing below and answer a few quick questions to see flexible mortgage deals matched to you.

Think carefully about securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

Information written by Brean Horne Last updated on 17 June 2022.

What is a flexible mortgage and how does it work?

A flexible mortgage is a type of mortgage that lets you change your monthly repayments depending on your financial circumstances. For example, you may have the option to overpay or underpay your mortgage for a month, or take a payment holiday.

Some of the common features that flexible mortgages offer include:

  • Overpayments: This allows you to pay more than the agreed monthly repayment set by the lender. Overpaying your mortgage could help you pay off the loan quicker, and may also reduce the overall amount of interest you pay during the mortgage term. Some lenders may restrict the amount of overpayment you can make.

  • Underpayments: Some lenders let you pay less than the agreed monthly mortgage repayment for a period of time. This option is usually only available if you’ve previously overpaid on your mortgage and you should always notify your lender in advance before making an underpayment.

  • Payment holidays: A mortgage payment holiday, or break, allows you to pause your monthly repayments for a set period of time. You’ll still have to pay off your mortgage in full after the holiday and may have to pay more interest overall if you do take a payment break.

  • Reserve account: A Mortgage Reserve account works like a secured overdraft that allows you to borrow against the equity in your home. However, these accounts are no longer widely available or are limited to existing customers.

  • Droplock: This type of mortgage lets you take out a tracker or discount mortgage deal and change to a fixed-rate mortgage without having to pay early repayment charges.

Can I get a flexible mortgage?

Flexible mortgages are open to all borrowers who meet a lender’s eligibility and affordability criteria.

This usually includes having a good credit score and being within a specified age limit. The lender will also assess your income and outgoings to make sure you can afford the mortgage.

What are the benefits of a flexible mortgage?

Flexible mortgages give you more choice when it comes to your monthly payments.

Depending on your mortgage, you will have the option to underpay, overpay, miss a payment or 'port' your mortgage to a new property when you move. Having this freedom can help you to make your mortgage work better for your lifestyle, for example, if your income fluctuates on a seasonal basis.

It also means it is possible to pay off your mortgage sooner than planned if you overpay consistently for long enough.

What are the downsides of flexible mortgages?

Flexible mortgage deals tend to have higher rates of interest than other options.

It can also be tricky to compare flexible mortgage deals because lenders have their own versions with different rules. You'll have to adhere to your lender’s individual criteria before accessing the flexible features.

For example, some lenders may want you to have been paying your mortgage off for a set amount of time before you can make an underpayment or overpayment.

There may also be limits to the amount you can overpay, with some lenders capping overpayments at 10% a year.

How do I choose the best flexible mortgage for me?

Shopping around and researching different deals is important for helping you choose the right flexible mortgage deal. Our flexible mortgage comparison tool can help you compare the latest deals.

Choose the reason you are borrowing: whether you are a first-time buyer, moving home, remortgaging or looking for a buy-to-let property. Then answer simple questions about the property value, mortgage amount and term length, and you’ll see the flexible mortgages available.

We’ll also show you a rough indication of the monthly repayments for each product, alongside the initial interest rate and APRC. The Annual Percentage Rate of Charge, or APRC.

highlights the true cost of the mortgage, including the interest rate but also additional charges, making it easier for you to compare mortgages.

Once you’ve made a shortlist of deals, it’s important to check the terms of each one. Lenders tend to have different rules of the flexible features on offer – for example, you may need to overpay on a mortgage before you can use the underpayment option.

So it’s important to set aside enough time to make sure the deal you apply for is the right match for your financial circumstances.

Flexible Mortgages FAQ

Will I pay more for a flexible mortgage?

Flexibility usually comes at a price, and you’re likely to pay a higher interest rate for a flexible mortgage, depending on what 'flexible' features it comes with.

What’s a flexible offset mortgage?

A flexible offset mortgage is a type of home loan that is linked to one of your savings accounts. The money in your savings accounts is used to pay off the mortgage interest on your monthly repayments. Your savings won’t earn any interest in an offset mortgage. Instead you’ll be able to do one of the following:

  • Pay off your mortgage sooner
  • Reduce your monthly repayments
  • Reduce future mortgage payments

What’s a flexible fixed-rate mortgage?

A flexible fixed-rate mortgage is a type of mortgage where the interest on your loan stays the same for a set period of time.

The fixed-rate term of a mortgage commonly lasts for two to five years, although some providers may offer up to 10 years. Once the fixed-term period ends, the mortgage will switch to the lender’s standard variable rate (SVR) unless you fix it with another deal.

What’s a flexible repayment mortgage?

Flexible repayment or capital repayment mortgages are a type of loan that lets you pay both the capital and interest off in monthly instalments over your mortgage term.

What’s a flexible tracker mortgage?

A flexible tracker mortgage has a variable rate of interest, which means that your repayments could increase or decrease from month to month.

This type of mortgage usually ‘tracks’ an interest rate linked to the Bank of England’s base rate for a set period of time. This means that if the base rate increases, the interest on your repayments are likely to increase and if the base rate goes down, the interest could become cheaper.

What are the benefits of flexible mortgages?

Flexible mortgages can be tailored to suit different lifestyles because they give borrowers more freedom when making repayments. For example, depending on your mortgage deal, you could choose to overpay your mortgage one month and then underpay or take a break the next.

What are the downsides of flexible mortgages?

Flexible mortgage deals can be more expensive than standard mortgages because lenders charge higher rates of interest. It can also take a lot of time to compare deals because lenders have their own versions of a flexible mortgage with different rules.

What fees will I have to pay for a flexible mortgage?

As a flexible mortgage is simply a standard mortgage with additional features, the fees you'll face are the same as with any mortgage, including an arrangement fee, a booking fee, a valuation fee and legal fees, though not all fees apply to all mortgages. It’s worth noting that flexible mortgages tend to be more expensive overall because lenders charge higher rates of interest for these types of deals.

What if I can't make my mortgage payments but I don't have a payment holiday facility?

If you don’t have a flexible mortgage but need to miss a payment or make an underpayment, it's essential you speak to your mortgage lender straight away to find out what help is available to you.

How can I compare flexible mortgages?

You can use NerdWallet’s mortgage comparison tool to compare the latest flexible mortgage deals. We’ll help you find the right deal by breaking down each lender offers, as well as the interest and fees you need to pay.

About the author:

Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more

NerdWallet has selected Koodoo to provide you with this information-only online comparison service on a non-advised basis. NerdWallet will receive a share of the commission that Koodoo earns from the lender or from our partnered broker, Fluent Mortgages.

Koodoo is the trading name of Mortgage Power Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 845978), and is a registered company in England and Wales (company registration number 10978680), with a registered address at Scale Space, 58 Wood Lane, London, W12 7RZ

Fluent Mortgages Ltd is authorised and regulated by the Financial Conduct Authority (FRN 458914), and is a registered company in England and Wales (company registration number 10978680), with a registered address at 102 Rivington House, Chorley, New Road, Horwich, Bolton, BL6 5UE