A flexible mortgage is a type of home loan that allows the borrower to overpay their regular monthly payments. As their overpayments build up, they can then choose to borrow some of that money back. Other options include the chance to take payment holidays or to pay less than the usual amount in some months.
As with all types of mortgages, interest rates vary for a flexible mortgage product. However, in general, the interest rate is likely to be higher than it would be for a standard fixed or variable rate loan. As such, it is important to consider whether a flexible loan would be the best option for you. If you intend to pay the same amount every month, there may be little point in getting such a mortgage. You may be better off finding a good deal for a fixed rate mortgage instead.
However, if you want to try and pay more than the minimum amount each month, a flexible mortgage may be a good option. It might also suit those whose income tends to vary, such as freelancers and other self-employed people. The chance to take the occasional payment holiday might be attractive during certain quieter times of the year when you are earning less, for instance.
That said, there are downsides. If you did take a payment holiday, your lender would continue to charge interest on your remaining mortgage throughout that period. This could result in paying off a higher total amount at the end of the mortgage. Of course, for some, the flexibility of this loan type is worth the extra payment, but it is important to work out whether it would be the best option for you. It does make it possible to pay off your mortgage far sooner if you want to overpay on a regular basis.