I need a flexible mortgage.. but I'm not entirely sure how they work. This is what I want out of my mortgage..

Question

Let's say my standard monthly repayments would be £800.

I want to be able to pay off £2000 one month, the next month I want to pay off £5000, then the next month I want to skip a payment. The following month I want to pay off £3000.

(But I don't want these over payments paying off the interest on the mortgage though. e.g. the house was bought for £150,000 and the total repayment on the mortgage would be £300,000........ I don't want to be overpaying to pay off that 300k, I want to over pay the 150k if that makes sense?)

You see what I'm getting at?

Are there mortgages like this? I'm desperate for some information on this!

Answer 1

Don't do it. Besides, these products are almost gone. Lenders finally woke up and saw that they are a bad idea because the people who get them default.

Get the best 30 year fixed rate loan that you can, with no prepayment penalty. If it has a payment of 2000, you can do almost what you want. In months when you are low on money, you only pay the 2000. When you have extra, you send in extra principle. So you can pay 3000 or 5000 in months when you have extra. You just can't send in less than 2000. Those months when you send in extra shorten your loan. Instead of 30 years, you might pay it off in 20.

Answer 2

A number of Banks & Building Societies offer what is known as an 'Offset Mortgage'

These are linked Current Accounts and Mortgage accounts.

You only pay Interest on the DIFFERENCE between the Current Account and Mortgage Account.

For for example, if you have £50k in your Current Account and you Mortage was £150k, you would be paying Interest on £100k only.


You still have to agree a monthly 'Mortgage Payment' (i.e. each month, some money is transferred from your Current Account to the Mortgage Account), however you can (usually) overpay as much as you like ...