The details will vary but basically this type of mortgage allows you to be flexible according to your future circumstances/ needs without having to pay a penalty.
So if you need to pay less due to unemployment or whatever, you can take a "payment holiday".
Or, if you win the lottery, you can pay more than usual - ie saving on interest payments in the long run.
(Traditional mortgages would penalise you for not sticking rigidly to the agreed repayments).
A truly flexible mortgage allows the following without penalty:
You can make over and under payments
You can have payment holidays
You can borrow back on payments already made
They should also calculate interest daily
Quite a few High Street mortgage lenders offer these but some are more flexible than others.
When you're comparing them make sure there isn't a minimum amount you have to pay or a limit to the number of any over/under payments.
Most people simply want a loan which allows them to "over pay" their repayment without penalty. It is this aspect of flexible loans where the greatest savings can be made because the quicker you pay off your loan the less interest you'll have to pay.
(It's been estimated that over paying on a loan with an interest rate of 7.74 per cent by £100 a month over 25 years will save you £41,000 in interest payments).