In the mid 90’s, a small group of mortgage lenders introduced the flexible mortgage from Australia. They recognised that flexible mortgages would be a good fit for the flexible working patterns common in the UK today.

When Flexible mortgages first came to the UK there were no fixed or discounted rate flexible deals available. Borrowers had to choose a variable rate, and the actual rates on offer were nowhere near as competitive as those available today. Also, until now Flexible Mortgages have been viewed mainly as suitable for people who have experience of being homeowners, rather than first time buyers. However, as flexible mortgages have evolved, the benefits to borrowers have increased and the first time buyers could do far worse than considering taking out a flexible mortgage.

What RE-MORTGAGE has done for you, the borrower, is to identify the six features that make up the credentials for a mortgage to be classed as a flexible mortgage.

· Underpayments:
With truly flexible mortgages, you can make underpayments, which could be useful if times of additional expenditure, say, Christmas or holidays. Most lenders insist that you have made overpayments before you can underpay. And of course underpaying is not the best idea as it adds to the time it takes to pay the mortgage debt off. But it can come in handy during the odd month when money is tight. And as long as you have made overpayments, you do not have to ask per mission or even inform your mortgage lender before underpaying.

· Overpayments:
The starting point of all flexible mortgages is the ability to make overpayments on your mortgage repayments. You may want to overpay on your repayments so as to pay of your mortgage dept as early as possible, the flexible mortgage will allow you to realise this commendable goal. You may also want to save money, which is achievable through even relatively small overpayments. It makes really good sense for you to make overpayments at this time, while interest rate are low.

· Payment holidays:
Many lenders also allow you to take payment holidays if you wish. Again, you will have to have made overpayments first, in order to take advantage of this feature, giving yourself a buffer of money. Some lenders will only let you take holidays once you have overpaid enough to cover the holiday period. Some flexible deals allow you to take a complete break from making payments for up to a year.

· Redemption penalties:
A redemption penalty is a fee charged by lenders when you redeem (pay off or move) your mortgage. Redemption penalties do not apply to regular standard variable rate loans - you should be free to chop and change between variable rate loans when you choose, as they are not the most competitive rates available. The exception is where a flexible mortgage comes with an initial fixed rate or discounted, in which case a redemption penalty is acceptable during that period only.

· Borrow back:
There may be occasions when you need to access a large sum of money. With many lenders you can borrow back from your overpayments. The beauty of overpayments is that rather than putting any spare cash into a savings account and earning a couple of per cent interest on it, because the amount you over pay is taken off your mortgage you are effectively earning the mortgage rate on your savings.

· Interest calculator:
Interest should be calculated daily for the benefits of overpayments to work hardest for you. If the lender calculates interest annually, there is no point in making an overpayment before the last day in the year. All banks have the capacity to calculate interest on a daily basis, and most large building societies can do it to. But not that some of the small societies may not have the computer systems in place to handle daily interest calculations.

Flexible Mortgages are designed to give you more control over your finances, but look out there are varying degrees of flexibility, you should be able to overpay, borrow back overpayments, underpay and take payment holidays. You can walk away from a flexible deal with no penalties, and your interest is calculated daily. So as soon as you make a payment you start paying interest on a smaller loan amount.
Flexible mortgages make sense, and more and more borrowers in the UK are waking up to this fact.