Special Mortgages

There are a number of variations on the standard mortgages on the market that exist now, offering the buyer greater flexibility and choice than ever before. Although some of these products may seem quite different from the standard mortgage, you will still need to make a choice between a repayment and interest-only mortgage.

Flexible Mortgages

One of the greatest advances in mortgage products over the last few years is the introduction of the flexible mortgage (also known as the All-In-One, or current account (CAM) mortgage), where you manage your mortgage as a current account within certain limits. This product was introduced in the 1990s from Australia (where they're the standard mortgage) and now accounts for approximately 20% of all mortgages.

Your income and savings are held in the same account as your mortgage, which means that your effective mortgage balance is reduced. As you only pay interest on the lower amount, you could save a tremendous amount of money over time and help cut years off your mortgage. You earn the same interest rate on your savings as you pay on your mortgage and you can borrow additional funds at any time (up to the maximum agreed mortgage).

A flexible mortgage is ideal for people with savings, the self-employed (who need to put aside money to pay their taxes) and those who receive periodic lump-sum payments. You can usually vary your monthly payments, make over-payments, underpay (if you've made overpayments) and take payment holidays.

However, flexible mortgages come with higher interest rates than standard home loans, but the great advantage is that they potentially allow you to pay your mortgage off years earlier than you originally planned, and save thousands of pounds in the process.

Offset Mortgages

Offset mortgages are a slight variation on the flexible mortgage, where your current account is held separately from your savings account. Your savings are then offset against the mortgage sum. This means that if you have a mortgage of £200,000 and savings of £20,000, you will pay interest on £180,000 and will repay your mortgage quicker. No interest is paid on your savings, but you will save money on the mortgage interest.