Flexible mortgage in the UK

Flexible mortgages in the UK can be ideal for people with an inconsistent income, like the self-employed especially if the mortgage offers a mortgage interest offset facility or current account facility.

If the flexible mortgage offers a mortgage interest offset facility this can be extremely tax efficient. Rather than having a conventional savings account, you can pay your savings into a savings account set up alongside your mortgage. The lender will only charge interest on the net mortgage balance after allowing for the credit balance in your savings account. You do not earn interest on the savings account but instead offset mortgage interest at the mortgage interest rate applicable to your loan. As you offset interest at the same rate as the mortgage, the interest savings will often be greater than the rate of interest earned on a conventional savings account. And what’s more there is no tax to pay, so in real terms offsetting interest on your flexible mortgage account is not only financially more efficient but it helps to reduce the term of the mortgage as the monthly mortgage payment includes an increased capital repayment that would have been paid in interest were it not for the interest that has been offset.