Similar in design to discounted mortgages, except that the lender will offer a cash lump sum up front instead of a discount over a specified period of time to the borrower on completion of the mortgage. Mortgage will be charged at the variable rate, with penalties for early repayment or redemption.

This type of mortgage can be described as a modern day option, which considers the desire on the part of individuals to vary the way in which payments are made. These mortgages allow for additional payments if they can be afforded which can save on interest or providing payment holidays, should circumstances prevail e.g. purchasing a new car. Interest is normally calculated on a daily basis, which is considered to be a fairer system.

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