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What is a Flexible Mortgage - And Who is It Best Suited To?

Is a flexible mortgage the most suitable option for you - and what does it mean? Find everything you need to know about flexible mortgage products and the most appropriate lenders.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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Understanding Flexible Mortgages and Ideal Candidates

The Revolution Brokers team receives multiple enquiries from people interested in a flexible mortgage, and the freedom it allows to change and fluctuate your repayments over time.

This guide will explain what a flexible mortgage is and what factors to consider if you are thinking about this type of home loan.

For further information or to enquire, give us a call on 0330 304 3040, or email the team.

Understanding Fixed-Rate Mortgages

Fixed-rate mortgages offer you a consistent interest rate over your loan's lifetime. This setup makes you immune to sudden spikes in interest rates, securing your monthly payments.

Explanation of a fixed-rate mortgage

A fixed-rate mortgage locks in your interest rate for the duration of your loan. This means your monthly payments remain the same, making it easier to budget and plan for the future.

You won't have to worry about rising interest rates affecting your payment amounts, which can offer peace of mind in fluctuating economic conditions.

Choosing this type of mortgage simplifies financial planning by providing stability and predictability. It's particularly appealing if you prefer knowing exactly what you will pay each month without any surprises.

As we move beyond explaining what a fixed-rate mortgage is, let's explore the advantages such stability offers to homeowners.

Benefits of having a fixed interest rate

Having a fixed interest rate means your monthly mortgage payments stay the same for the entire term. This stability makes budgeting simpler because you know exactly how much you need to pay each month.

It protects you from rising interest rates, ensuring that sudden hikes won't increase your payment amounts. Homeowners find this predictability reassuring, allowing them to plan their finances with confidence.

Opting for a fixed-rate mortgage also offers peace of mind. You won't have to worry about fluctuating flexible mortgage rates affecting your monthly expenses. This certainty is particularly valuable during periods of economic volatility when interest rates might climb significantly.

By locking in a rate, you effectively shield yourself from unexpected financial strain due to increased borrowing costs.

Choosing the right term for your needs

Selecting the correct term for your mortgage affects both your monthly payment and the total interest you'll pay over time. Shorter terms, like 15 years, usually have lower interest rates but higher monthly payments.

On the other hand, longer terms, such as 30 years, spread out repayment over more time which lowers your monthly bill but increases the amount of interest you'll end up paying.

Consider your financial situation and future plans carefully before deciding on a term. If you plan to stay in your home for many years and can afford higher payments, a shorter term might save you money on interest in the long run.

For those who need more flexibility in their budget or are unsure about their long-term plans, a longer term could be a better fit. Always compare different options and consider how they align with both your current needs and future goals.

Applying for a Fixed-Rate Mortgage

Starting your journey to get a fixed-rate mortgage begins with filling out an application with a lender before you choose from buy-to-let mortgages or other types. You'll need to gather financial documents and figure out how much money you can borrow for your new home.

How to apply

Applying for a fixed-rate mortgage involves several clear steps. Each phase helps you secure the best deal for your financial situation.

  1. Gather your documents. You need proof of income such as rental income, assets, debts, and identification. These documents show lenders you can afford the mortgage payments.
  2. Check your credit score. A higher score can get you lower interest rates. If your score is low, consider ways to improve it before applying.
  3. Research lenders. Look at banks, credit unions, and online lenders to find the best rates and terms. Don’t skip this step; comparing offers can save you money.
  4. Use a flexible mortgage calculator if considering other options like flexible mortgages or flexible lifetime mortgages. This tool helps you understand different payment plans and interests over time.
  5. Get pre-approved. This step gives you an idea of how much you can borrow and shows sellers you're serious about buying.
  6. Choose the right loan term for your needs—usually 15, 20, or 30 years for fixed-rate mortgages.
  7. Fill out the application form from your chosen lender carefully to ensure all information is accurate and complete.
  8. Await approval after the lender reviews your application and performs a credit check.
  9. Navigate the inspection process if required by the lender to assess the buy-to-let property value and condition.
  10. Finally, close on your loan after all approvals are in place; this last step involves signing lots of paperwork but ultimately leads to owning your home with a fixed-rate mortgage in place.

Alternatives to Fixed-Rate Mortgages

Exploring other types of mortgages can open up new possibilities for homebuyers. Flexible, tracker, and lifetime mortgages offer different advantages that might fit your financial situation better.

Flexible mortgages

Flexible mortgages offer homeowners the ability to adjust their payments based on current financial situations. With flexible mortgage rates in the UK, you can overpay, underpay, or even take a payment holiday if your lender agrees.

This type of mortgage is ideal for people with irregular incomes.

Many flexible mortgages like buy-to-let mortgage also come without early repayment charges. This means you can pay off your mortgage faster without facing penalties if your financial situation improves. They give you more control over your loan and can help save money on interest over time.

If you choose an interest-only mortgage, your monthly payments can be smaller because they only cover the interest your are incurring each month and the balance borrowed must be prepared as a lump sum.

Tracker mortgages

Tracker mortgages directly follow the Bank of England's base rate with a set margin above or below it. This means your monthly payments can change based on how the base rate fluctuates.

If the rate goes up, so do your repayments; if it drops, you pay less each month. This option offers flexibility and potentially lower rates during periods of economic downturn.

Many people choose tracker mortgages for their potential savings in a falling interest rate environment. It's crucial to consider this type of mortgage carefully because while there can be significant savings when rates are low, payments can increase rapidly if rates rise.

Always compare flexible mortgage rates in the UK and consider how changes in interest could affect your budget over time.

Lifetime mortgages

Lifetime mortgages offer homeowners, typically over the age of 55, a way to release equity from their property without moving out. Homeowners borrow against their home's value and do not make monthly repayments.

Instead, the loan plus interest is repaid when the homeowner dies or moves into long-term care. It’s a popular choice for those wanting to supplement retirement income or provide financial help to family members.

Interest rates for lifetime mortgages can be higher than other mortgage types, but they allow owners to maintain possession of their homes while accessing funds. Each plan comes with its own set of rules and early repayment charge strategies, making it essential for potential borrowers to review options carefully.

Moving on from lifetime mortgages, exploring how to secure the best fixed-rate mortgage deal is another crucial step in managing your home finance effectively.

Calculating how much you can borrow

Calculating how much you can borrow depends mostly on your income, debts, and credit score. Lenders look at these to decide the maximum mortgage amount you can handle without struggling.

They use a debt-to-income ratio (DTI) which compares your monthly debt payments to your pre-tax income. A lower DTI means you can likely borrow more.

To figure out this number yourself, add up all your monthly debt payments including loans and credit card bills. Then divide by your gross monthly income. Most lenders prefer a DTI of 36% or less, but some flexible mortgage lenders may allow higher ratios.

Always check with multiple lenders to see where you might get the best deal and understand their specific requirements for borrowing limits.

Using a mortgage cost and repayment calculator

Using a lifetime mortgage cost and repayment calculator helps you understand your potential monthly payments and total loan costs. You input details about the loan amount, interest rate, and term length.

The tool then calculates your monthly payment. This makes it easy to see how different rates and terms affect what you pay each month and gather information about the equity release.

Knowing these numbers is crucial for budgeting and making informed decisions. It can also show you how extra payments could speed up your mortgage payoff time. Next, we will explore current fixed-rate mortgage rates to help you find a good deal.

How is a Flexible Mortgage Different?

A flexible mortgage is a loan secured against your home, but with the option to change how much you pay back each month.

Typical features include:

  • Ability to make over or underpayments.
  • Daily interest calculations.
  • Optional payment holidays.
  • A flexible mortgage savings account.
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you may be able to borrow


Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.


Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.


Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

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How do Over and Underpayments Work on a Flexible Mortgage?

The lender will set a monthly payment value, and you can choose to pay more or less as you wish.

Overpayments mean that you pay back the mortgage faster, and reduce your total interest cost. You can overpay by up to 10% of the outstanding balance on your mortgage in most cases.

You can also pay less, although different lenders will have different rules about how much you can underpay by, and for how long.

Why is Interest Calculated Daily on a Flexible Mortgage?

Given that you can make changes to your payments, within the terms of the contract, a flexible mortgage calculates interest each day rather than each month or year.

The positive is that if you make an additional repayment, your interest costs will immediately drop, rather than waiting until the next month or year to be recalculated.

What Payment Holidays are Available on a Flexible Mortgage?

Payment holidays can be invaluable if you have experienced a drop in income or want to hold onto your planned mortgage repayment value to cover other costs.

In some cases, rules limit a payment holiday up to six months or only allow a payment holiday if you have overpaid by a specific value.

You need to understand that interest continues to accrue while you take a repayment holiday to increase the total interest cost.

What is a Flexible Mortgage Savings Account?

Some flexible mortgage products offer you a savings option, where you can deposit your overpayments but set the funds aside to drawback out again should you wish.

What is Switching in a Flexible Mortgage?

Switching means that you can go back and forth between different flexible mortgage products, without an early repayment penalty or needing to start from scratch with a remortgage.

That could mean switching from a tracker rate to a fixed rate, for example.

What Types of Flexible Mortgage are Available?

There are multiple different forms of flexible mortgages:

  • Flexible repayment mortgages are standard in terms of the term and payment basis but usually give the option to make overpayments or underpayments or take a payment holiday.
  • Flexible offset mortgages offset your outstanding mortgage balance against your savings. Interest is only charged on the net debt remaining.
  • Flexible fixed-rate mortgages use a static interest rate for a set period.
  • Flexible tracker mortgages use a changing interest rate based on the base rate and change it over time with the Bank of England rates.

Switching features are ideal, as they allow you to change between these flexible mortgage types without any penalty, to take advantage of changes to the interest rates on offer.

Is a Flexible Mortgage Calculator Worth Using?

Flexible mortgage calculators are useful and indicate what you can borrow and your standard repayment value.

Each lender has different rates and criteria, so a generic flexible mortgage calculator should only be used to get a very rough idea about your cost of borrowing.

Which UK Lenders Offer the Best Deals on Flexible Mortgages?

Terms available can vary significantly between lenders, so the best way to find a competitive, flexible mortgage is to seek advice from an independent, whole-of-market mortgage provider.

Can recommend any product from any lender, as well as negotiate terms and rates on your behalf.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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