Mortgage features - various kinds of mortgage features

Mortgages offered in the UK markets can have different features. For example, here is a list of typical features that you'll find:

--cashback mortgages
--flexible mortgages
--offset mortgages
--current account mortgages

Look at Sections 4 and 12 of the keyfacts document about this mortgage which will explain the features of the mortgage.

Cashback mortgage

This may be offered with some kind of interest-rate deal. The mortgage lender pays you a substantial sum (for example 3-5% of the amount you borrow) shortly after you take up the mortgage loan. If you move to another lender in the early years you'll have to repay some or all of the cashback received.

Is it right for you?

May be yes, if you need a large cash sum - for example, to buy house furnishing like furniture, or you expect the sum to more than compensate for any interest-rate rises during the penalty period.
Possibly not, if you can manage without the cashback now and can get a better overall deal elsewhere.
So ultimately it’s your call, you have to decide and predict whether you may get a better deal later and whether you would like to switch later.


Flexible mortgage

A flexible mortgage gives you some scope to change your monthly payments to suit your ability to pay. It's also useful if you want to pay off your loan more quickly. Several flexible features are becoming common and they aren't limited to mortgages with 'flexible' in their name. Here are some flexible features:
--Overpayments - you can pay more than your normal monthly mortgage payment or pay off a lump sum, or both.
--Underpayments and payment holidays - you pay less than the normal monthly payment for a limited period (say six or twelve months). You may even be able to stop making payments altogether. This could be useful if, say, you lose your job or take time off to care for a child.
--Borrow extra (loan drawdown) - you can borrow extra without further approval from your lender, provided the total loan does not go above an overall limit. Alternatively you may be able to 'borrow back' against earlier overpayments.

Is a flexible mortgage right for you?
Possibly, yes, if you are likely to use these features, for example if you're self-employed and have a variable income.
Possibly not, if you are unlikely to use these features. A less flexible mortgage may be cheaper or more suitable for you.


Let’s discuss the Offset and Current Account Mortgage in the following article.

Link to Previous article on Types of Interest rate deals on Mortgages.