Is switching to a flexible mortgage a good idea?

In recent years there has been a revolution in the mortgage market, with moves towards flexible deals.

They have many advantages. Capital repayment mortgages allow you to reduce interest by making additional payments when times are good.

So if, for example, your self employed with intermittent earnings, get paid occasional bonuses at work, or have investments that occasionally pay out, then a flexible capital repayment mortgage could lead to savings in the long term.

‘Chequebook’ mortgages, which allow you to use your mortgage like a bank account, are becoming widespread too.

With these you can make payments whenever you chose, borrow back sums overpaid, and even take payment holidays when times are hard.

But there is a downside. A higher than usual deposit may well be required. Also, making regular payments requires discipline. There is a temptation with flexible mortgages to miss payments, or use the money for something else, resulting in an increased mortgage debt and the possibility that you may never pay off your loan.

So flexible mortgages should be treated with care. The extra administration requirement also makes them more expensive, so if you’re not going to make use of the facilities they offer there’s no point switching to flexible mortgages.