Just a few years ago, the bright idea of flexible mortgages burst onto the personal finance stage. They had all the trappings needed for success. The hype machine smiled upon them and providers promised they would revolutionise mortgage selling and simplify the process for everybody.
Sadly, and with only several notable exceptions, flexible mortgages ‘ some of which are wrapped in current accounts ‘ have proved to be a talent that promised much but offered much less.
They have hardly given us anything different from the standards that went before.
Sometimes, the greatest satisfaction they provide is in successfully completing the application forms. In fact, a representative from one company once told me that even they could not understand certain sections of the application form.
The truth is, if you want a low rate, redemption penalties on flexible mortgages can be punitive.
And if you want to overpay or underpay, the price is often a higher interest rate and, ironically, their flexibility is often in inverse proportion to the name they carry.
As a long-term supporter of the underlying common sense behind these products, I do not wish to be in a position where we have nothing good to say about a new product innovation. But while the concept of putting all your payment eggs in one basket has its attractions, it can also be a licence to borrow at higher rates, causing serious financial problems for borrowers.
Let us say a customer has a separate £10,000 savings pot. Are they better off putting it into a no-notice savings account that earns up to 4.5% gross than expensively paying off debt in a flexible account at 5.2%?
It is also true to say the same consumer, if proficient enough in personal finance dealings, could use these accounts to make money at the same rate.
But pragmatically, most of our clients live in a world which is a simple struggle against debt. They shy away from consumer-unfriendly structures that complicate the battle.
Given a mortgage choice, they still feel safer with the most competitive two-year or five-year rate due to simplicity and the attraction of knowing exactly what payments they have to budget for.
If we, in our role as financial advisers, are going to properly advise our clients, we must tell them that flexible mortgages are a core option to consider.
But we must do this in the knowledge that we have told mortgage providers what those clients really need.