What is a Current Account Mortgage?
Current account mortgages are fairly new to the sector. They
are quite different to other types of mortgage as they enable you
to set off all your savings and debts in one single account.
Several lenders offer this type of flexible mortgage that is
linked to a current account, and is called a current account
mortgage. Your mortgage account and your bank account are merged
into one and you are issued with a check book and cash card just
as you would with an ordinary current account.
You pay your salary into the account and a proportion is
automatically used to meet your monthly mortgage repayment. You
can pay as much off your mortgage as and when you like, according
to monthly minimums set by the mortgage lender. You can also use
your savings to put against your mortgage, paying the mortgage
off more quickly and reducing interest payments.
A current account mortgage allows you to run a current account
against the mortgage allowing any money in the current account to
offset against the mortgage and reduce the overall interest you
pay on the loan. This in turn will reduce the mortgage term.
A current account mortgage is where you put most or all of
your financial commitments into one account. So your savings and
your income are paid into the one mortgage account and all your
debts are combined in the same account. It's not so much a
mortgage, more of a large overdraft that's secured on your
Current account mortgages work by turning your mortgage into a
large overdraft. They allow you to set off all the savings you
have against all the debts you that owe. You combine all your
debts with all of your income in a single current account. So
every time your salary is paid in, you reduce the amount of the
'overdraft'. Every time you take money out, the overdraft
increases. This means you can overpay and underpay without being
penalised for it.
The more savings and income you have in your account, the less
interest you will pay overall. Since the interest is calculated
on a daily basis, you will immediately benefit from any
overpayments you make.
At any time you can borrow back some or all of the money you
have managed to overpay on your mortgage. These mortgages are
ideal for those who are paid regular bonuses so consequently can
reduce the mortgage balance quickly.
The good thing about current account mortgages is that the
interest charges on all your borrowings are at a cheaper,
variable rate for mortgages instead of the more common credit
card rates. To compensate for this, rates on current account
mortgages, tend to be slightly higher than standard
You may freely reprint this article provided the author's
biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the http://www.directonlineloans.co.uk
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'Flat' mortgage market aheadCUNA News (press release)This year is turning out like most people predicted in the mortgage arena. Rising interest rates have significantly hampered the mortgage refinance market. The growth of the purchase market can only be as great as the inventory of available homes.
Mortgage Refinancing - CredibleCredible News (blog)It's quick and painless. Tell us a little bit about you and your home to get accurate prequalified rates without impacting your credit score. 2. Compare rates from ...and more »
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