Some people consider flexible mortgages to be  the best financial invention of modern times. Others consider them the devil's spawn. In fact flexible mortgages are just a financial product but one that certainly gets people very excited! Flexible mortgages aren't for the faint-hearted but in the right hands they can really put you in the driver's seat of your mortgage and your financial future.

A flexible mortgage is quite a simply a loan secured against your home  - so far so normal. But there is no set repayment schedule, no fixed interest payments, no restrictions on repaying the loan early or late, or withdrawing funds from the mortgage at random intervals. The very flexibility is what gets people into trouble.

The details of a flexible mortgage varies between countries but the following are fairly common features: check with your local friendly mortgage broker for your local details. Flexible mortgages usually have:

• a borrowing limit but freedom to borrow up that limit multiple times so long as you repay some debt in between times;

• no fixed interest rate - the rate is generally floating and changes in line with market conditions. Interest payable is calculated on the daily out standing balance and added to the loan monthly;
• no fixed repayment schedule - there is no requirement to make monthly or any installments - you can pay back monthly or never - its up to you - so long as the accumulated balance is below your credit limit the bank is happy;
• often you can use a flexible mortgage as a personal line of credit or even as your checking account with access to your mortgage via your cheque book or debit card, and the ability to have your salary direct credited to the account and bill payments set up from it.
• alternatively, flexible mortgages in the UK have a linked saving account and current account rather than a single combined line of credit.

What Are the Advantages of a Flexible Mortgage

At the risk of sounding redundant - flexibility is the key feature of flexible loans. You can borrow for whatever whenever and pay it back when you want. There is no need for time-consuming paper work or explanation of why you want the mortgage - you just apply and get the loan. Instead of paying a premium loan rate for a car loan Australians will generally just put the car on the house as they say.

What Are the Disadvantages of a Flexible Mortgage

Most flexible mortgage interest rates are slightly higher than that of a conventional floating rate mortgage. There is often usually a monthly account keeping fee as well - of the same order of magnitude of that for a conventional checking account. Both of these charges can be far outweighed by the savings available to consumers who repay their mortgages

The biggest single disadvantage of flexible mortgages is that they are not available to everyone. If you want to remortgage with bad credit - a flexible loan is not for you. You also won't be able to borrow 100% of the house's value either. Some banks will offer loans as low as 60% of the value for flexible loans and require the rest of the mortgage in a more conventional mortgage. You will need an excellent credit history and a home in an area of solid values to get a flexible loan.

Will a Flexible Mortgage Suit Me?

Flexible mortgages are idea for anyone who has an irregular income: commission salesmen and business owners come to mind. Anyone who need to collect tax and then forward it to the government some time later can leave the payments in their flexible loan account to the last minute and save on their mortgage interest bill.

A flexible mortgage allows you to also smooth uneven outgoings, for example for someone who works seasonally or irregular large payments to make. If you use a flexible mortgage to borrow for your business or for a car you will pay less than if you got a business or car loan.

To absolutely minimise the interest paid on your flexible mortgage you should have all salaries and other payments direct credited to your loan account. You should then make as many regular payments as possible on a credit card with the longest interest-free period available. Set up an automatic payment to pay off the credit card in total the day its due - thus maximizing the length of time you keep the higher balance in your line of credit.

There is a huge caveat for people considering a flexible mortgage though. Know thyself. Do you have the fiscal discipline to have tens or even hundreds of thousands of pounds or dollars available to you and not go on a crazy buying-spree. If you end up using your loan to fund a lifestyle you can't afford then flexible mortgages are definitely not for you.