Guide to best flexible mortgages currently on market

Caroline Cassidy

If you, like many others, are struggling to cope financially, keeping up with the mortgage repayments can be stressful. But considering a flexible mortgage might offer a solution.

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A flexible mortgage offers borrowers the chance to overpay when they have cash to spare and underpay when things get tight.

As well as this, payment holidays can be taken, though it's important to remember that both underpayments and payment holidays may increase the term of the mortgage and/or the total amount payable.

However, such a system is well-suited to those with a flexible income - the self-employed, sales people who work on commission or even those wanting to start a family, who may be able to overpay before the birth and underpay once the baby arrives.

This flexibility allows you to pay off your mortgage early, without penalty, by overpaying and means you can benefit from any fall in the Bank of England's base rate (though this works both ways).

Some lenders will allow you to offset your current account or savings balance against the outstanding mortgage balance.

For example, if your account balance is £5,000 and your outstanding mortgage £100,000, you will only pay interest on £95,000.

First Direct are currently offering an offset mortgage at an initial rate of 2.59%, rising to 2.79% (with a 35 per cent deposit) while HSBC offer a tracker mortgage with an overall rate of just 2.2% (40 per cent deposit) or allow borrowers to put down a deposit of just 30 per cent, with a fixed rate of 2.19% for two years, rising to a subsequent 3.94%.

ING Direct also offer a flexible mortgage with a 25 per cent deposit and an initial rate of 2.54% rises to 3.5% thereafter.

However, arrangement fees and terms may vary. Those lenders that offer an initial fixed rate will often stipulate that no underpayments can be made until that fixed rate term has ended.

If you think a flexible mortgage might work for you, check out the online comparison sites for more information or visit a mortgage advisor to discuss your situation.