A flexible mortgage is a form of variable rate mortgage which lets you make both over-payments and under-payments. This can be an excellent option especially if you are able to make over-payments on a regular basis. What this means is you can overpay your mortgage when you are able to (if for example you receive bonuses at work) and if you do this regularly you are free to make under-payments if money becomes a little tight.
Flexible mortgages were introduced in the UK in 1994, having originated in Australia many years ago. They have increased greatly in popularity with British homeowners due to the fact that every overpayment above the regular monthly repayment contributes to reducing the capital of the loan. Interest is also calculated daily and so your mortgage benefits immediately. Experience has shown in Australia and also in the UK that regular overpayment on this type of mortgage can cut years off the loan term.
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