Flexible mortgages

If there is such a thing as a fashionable mortgage, this is it.

Flexible mortgages come in many guises, but in most cases they allow you to make extra lump sum or monthly payments, borrow back money, take payment holidays and make underpayments. Some flexible mortgages double up as current accounts - your salary is paid in monthly and you effectively pay off an enormous overdraft.

They also charge you interest on your loan on a daily basis, which means you don't pay interest on money you've already paid back.

There are an enormous amount of flexible mortgages on the market. Some have all the above selling points, and others have a smaller selection.

Not surprisingly, flexible mortgages come with higher interest rates than standard home loans, but the great advantage is that they potentially allow you to pay your mortgage off years earlier than you originally planned.

If borrowing back the money you have already poured into your home loan is what you're after, flexible mortgages can offer a much cheaper alternative to personal loans.

Annual percentage rates (APRs) on flexible mortgages are invariably a good few per cent lower than the rates on secured personal loans. But if paying off the mortgage early is your primary motivation for choosing a flexible mortgage - and in many cases it is; more borrowers use the early repayment functions than the payment holiday options - there is often a cheaper way.

Ordinary mortgages with no early repayment penalties normally let you pay back a certain amount extra per year, and they charge lower APRs than their flexible counterparts.

Some will allow you to pay back up to a certain percentage of your mortgage balance, such as 15%, while others will let you pay off as much as you like.