Are you sure you want flexibility?

Flexible mortgages are becoming commonplace as even the big lenders which said they could not cope with them have finally succumbed to the trend.

A number of banks such as Bank of Scotland and Legal & General offer flexible mortgages with chequebooks, allowing home buyers to "borrow back" amounts in accounts which are ahead of the agreed schedule. These normally put a £500 or £1,000 minimum on the sum withdrawn. They are intended for large purchase decisions.

But the current account mortgage (Cam) goes much further, linking a flexible mortgage to a replacement bank account you can use for everyday purchases.

They are controversial as you could easily build up a large amount of equity and then blow it all on a holiday. In some circumstances customers may never be free of their mortgage chains.

Like most other products that carry the flexible title, interest is calculated daily so any changes in your balance, for however short a period, change the interest payments.

You can make extra payments at any time, and of any amount, and it will reduce the interest you pay.

This facility allows you to pay off the mortgage early or arrange payment holidays where you pay less, or no money for a period of time.

But the distinguishing feature of a Cam is that it offers instant access to your mortgage account. You get a chequebook, cash card and a monthly statement to keep you on top of your finances. You can also arrange standing orders and direct debits.

Paying money into a Cam has advantages over salting it away in a savings account. By putting your savings into your Cam you pay less interest on your mortgage, say 8%, rather than gaining interest at, say, a taxed 3%.

You also avoid paying tax as technically you are not earning interest. Virgin Direct, one of only two lenders which offer Cams, reckons that over 30 years an average customer might pay £1m into a current account while an average bank account will pay only £40 interest on all that money.

Its Cam, which is offered with a credit-card facility, is called Virgin One.

First Active's current account mortgage is broadly similar, though there are a couple of significant differences. For example, First Active does not require borrowers to take the current account option, whereas Virgin obliges all borrowers to pay their salary into the loan account and pay their bills out of it.

That said, First Active claims that many people opting for its more traditional flexible mortgage are switching over to the current account loan later on.

And while First Active closes off the overdraft facility each month by the minimum repayment, helping people to keep a tab on their finances, Virgin does not. With Virgin One, borrowers also have the freedom to vary their payment frequency as they wish.

Neither lender makes any charge for arranging the mortgage, nor are there any redemption penalties or compulsory insurances. Current account mortgages can suit those with erratic incomes, the self-employed and the self-disciplined who want to pay their mortgages off quickly.

But the freedom offered by Cams also means you are free to get into trouble. They are complex to maintain and could be disastrous for some borrowers. Many of us, if we are honest, would need some one to stand over us and make sure we make capital repayments on a regular basis.

If borrowers are lulled into a false sense of security with Cams, some might end up never paying off their loans. Home buyers who keep on borrowing will face an increasingly steep repayment curve. A £5,000 car here, a £1,000 holiday there andbefore you know it, the mortgage debt has almost doubled.

Some mortgage advisers and lenders claim Cams may confuse many people and are best suited to the cautious and prudent, who will not let their debts run out of control. They say that selling current account mortgages on a no-advice, execution-only basis could be putting a millstone around borrowers' necks.

One of the country's most competitive mortgage lenders, the Chorley & District building society, has just launched a flexible mortgage, but it stopped short of offering a Cam because of such concerns.

"We believe that the vast majority of people would find it too easy to jack up their mortgage debt if it had a chequebook attached," says its chief executive, Stephen Bullock. "To run a current account mortgage safely, borrowers must have lots of time and discipline and we decided that the vast majority of people don't actually want that sort of product."