Flexible Features
Some mortgages offer you options to vary your monthly payments, or to combine your mortgage account with savings and other income - these are called flexible, current account and ‘offset’ mortgages.
More about flexible, current account and offset mortgages
There are different types of mortgages that offer different features. For example:
- cashback mortgages;
- flexible mortgages;
- offset mortgages; and
- current account mortgages.
Cashback mortgage
This may be offered with an interest-rate deal. The lender pays you a substantial sum (for example 3-5% of the amount you borrow) shortly after you take up the loan. If you move to another lender in the early years, you’ll have to repay some or all of the cashback received.
Flexible mortgage
A flexible mortgage gives you some range to change your monthly payments to suit your payment needs. If you want to pay off your loan more quickly, this type might be useful. Several flexible features are becoming common and they aren’t limited to mortgages with ‘flexible’ in their name. Here are some flexible features:
Offset mortgage
With an offset mortgage, your main current account or savings account (or both) are linked to your mortgage and are usually, but not always, held with the mortgage lender. Each month, the amount you owe on your mortgage is reduced by the amount in these accounts before working out the interest due on the loan.
So as your current account and savings balances go up, you pay less on your mortgage. As they go down, you pay more.
Current account mortgage
A current account mortgage is similar to an offset mortgage in that it offsets the balance of your savings against your mortgage. However, in this case, rather than your mortgage and current account being separate pots of money, they are usually combined into one account. This means that the account acts like one big overdraft.
