Personal Finance: Pay as you please

IF YOU want to be in total control of your finances, a handful of lenders offer a lending package that operates as a current account.

Kleinwort Benson and Virgin offer what is in effect a total lending package, including a mortgage. Several other lenders give borrowers the chance to take an extra loan against their home for any purpose.

The "total lending" schemes amalgamate all your banking and finance commitments into one package, which can lead to considerable savings. Instead of high interest charges on personal loans you just pay the mortgage rate of interest.

At first there is an agreed rate of monthly repayment. After that, you can put in as much as you want. You can pay off part of your loan at any time without any charge or penalty.

If you want to keep your mortgage account separate, there are lots of ordinary flexible mortgages. Woolwich has begun to offer a five-year fixed- rate flexible mortgage at 6.75 per cent. You can borrow up to 90 per cent of the value of your home with its Open Plan mortgage and repay up to 10 per cent of the loan each year.

Contract workers and the self-employed usually find it difficult to get a mortgage unless they have several years of financial records. Companies offering flexible mortgages believe they are ideally suited to this section of the market.

Wendy Gosbee, a business systems consultant, works on short-term contracts. She took out a pounds 100,000 Personal Choice mortgage with Bank of Scotland.

"It took just a week from my first telephone call to agreement in principle for the mortgage," Ms Gosbee says. "During this time they checked with my accountant that I was actively trading."

She can pay off lump sums whenever she wants. "This type of mortgage does not penalise anyone if they make extra payments. I like the fact I am the one who manages the finances."

An pounds 80,000 interest-only loan over 25 years would entail repayments of pounds 596 a month. "If the customer paid an extra pounds 20 a month, that is pounds 616, they would save pounds 16,200 in interest charges over the life of the mortgage," says Ronnie Macaulay at Bank of Scotland.

Contacts: Bank of Scotland, 0800 810810; Kleinwort Benson, 0800 317477; Royal Bank of Scotland, 0800 121121; Virgin One, 08456 000001; Woolwich, 0645 757575.