The House Hop Guide to Mortgages

Varieties of Mortgage

Repayment mortgages now come in a number of varieties.

As well as the standard repayment mortgage through which you pay off the interest and principal at a fixed rate, you can now get:

• flexible mortgages
• offset mortgages
• current account mortgages

Flexible Mortgages

A flexible mortgage, as the name suggests, allows you to alter your payments as your circumstances change.


With a flexible mortgage you can:

• make over payments
• make under payments
• pay off lump sums
• take payment holidays
• borrow extra providing you stay within your limit

Offset Mortgages

If you have an offset mortgage then either your current account, your savings account or both will be linked to your mortgage account.

Each month the amount of credit in your current and/or savings account is offset against your outstanding mortgage balance. Your mortgage interest payments are then reduced accordingly in exchange for which you will not receive any interest on your other accounts.

In theory, an offset mortgage can be paid off much sooner than a normal mortgage since interest will accrue more slowly. This depends, however, on the amount that you have saved and the positive balance that is in your current and/or savings account each month.

Current Account Mortgages

Current account mortgages are similar to offset mortgages.

The difference is that rather than linking your various accounts, but keeping them separate, your current account and mortgage are combined — effectively creating a giant overdraft.