Flexible mortgages

In addition to the emergence of the nonconforming sector, the United Kingdom has also seen the development of an active buy-to-let market, flexible mortgages, and a reverse mortgage market, all of which have been used as collateral for MBS transactions. 

Flexible mortgages and cmrent account mortgages have the advantages for the borrower of being able to prepay without penalty and then. 

Flexible and offset account mortgages present a significant challenge to pass-through transaction structures. This arises because the borrowers requests to redraw previous prepayments could in aggregate exceed the principal receipts. The experiences of Australian mortgage lenders. 

The flexibility of securitization is a key advantage for both issuers and investors. Financial-engineering techniques employed by investment banks today enable bonds to be created from any type of cash flow. The most typical such flows are those generated by high-volume loans such as residential mortgages and car and credit card loans, which are recorded as assets on bank or financial-house balance sheets. In a securitization, the loan assets are packaged together, and their interest payments are used to service the new bond issue. 

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