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he term <b>flexible mortgage</b> refers to a UK residential mortgage that offers <i>flexibility</i> in the requirements to make monthly repayments.
<p>Typical features include the facility:</p>
<ul><li>to make overpayments (more than the normal amount)</li><li>to redraw (borrow back) any previous overpayments</li><li>to underpay - less than the normal amount</li><li>to take a payment holiday - stop repayments for a period, typically 3 to 12 months.
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<p>These features allow a flexible mortgage to be adaptable to
individual circumstances. This is especially useful for self employed
borrowers and those with a variable income. By way of example,
borrowers whose income includes a significant but irregular commission
component might make use of commission payments to make overpayments,
thereby reducing the term or enabling them to underpay at other times.</p>
<p>With traditional mortgages, borrowers often face large penalties for
additional capital repayments or if payments were not made on time.</p>
<p><a name="History" id="History"></a><span class="editsection"></span><span class="mw-headline">History</span></p>
<p>The flexible mortgage was first successfully introduced in Australia in the early 1990's leading to the phrase <i>Australian mortgage</i> being used to describe this type of arrangement.</p>
<p>The concept was imported into the UK in 1995.</p>
<p><a name="Offset_mortgages" id="Offset_mortgages"></a><span class="editsection"></span><span class="mw-headline">Offset mortgages</span></p>
<dl><dd>
<div class="noprint"><i>Main article: Offset mortgage</i></div>
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<p>An extension of this idea is to allow capital balance to be <i>offset</i> against the debt balance to reduce the mortgage interest charged.</p>