Current Account Mortgages - Apply for a current account mortgage

Current Account Mortgages

Current Account Mortgages combine a customer’s bank account with their mortgage, so that the mortgage debt is reduced using savings, earnings and any other loans. In other words your savings and salary can be used to make mortgage repayments as your current account mortgage acts as a very large overdraft.

It is a good way simplifying your monthly outgoings and streamlining your finances. Current account mortgages are usually more flexible than traditional mortgages as they allow under and over payments, no early redemption penalties and the option of additional borrowing if required. Of course if you run into financial problems though your home could be at risk. Similarly although current account mortgages allow under payments, taking advantage of this too regularly will increase the cost of the mortgage.

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Can I Use a Current Account Mortgage to Consolidate My Debt?

Current Account Mortgages allow borrowers to reduce mortgage debt in a form which offers lower rates of interest than credit cards or other loans. Therefore, if you have outstanding credit card arrears or high interest loans, by transferring them into a current account mortgage you will reduce the interest you have to pay in the long run.

Is a Current Account Mortgage Right For Me?

Current account mortgages are not suitable for everyone, and make most financial sense to those with a steady cash flow and no long standing debts. If you do decide on a current account mortgage you’ll find you can pay in and take out cash like an ordinary bank account, whilst repaying your mortgage at the same time.

What are the Advantages of a Current Account Mortgage?

The lack of redemption fees means that it is more attractive for borrowers to pay off their mortgage early or overpay, this could save them money in the long run. A current account mortgage allows you to combine other debts and credit card debt into your mortgage, mortgages are relatively cheap loans in terms of interest rates compared to credit card debt so combining your finances could save you money. Similarly any savings that you have, like with offset mortgages, will decrease the cost of your mortgage by reducing the rate of interest. Although you won’t make money on your savings they will be decreasing your debt at a faster rate - making you more money in the long run.

What are the Disadvantages of a Current Account Mortgage?

Many people have a problem understanding the concept of current account mortgages and whether or not it will save them money. It is harder to make comparisons between current account mortgages and conventional mortgages. Failure to manage repayments effectively can result in greater debt.

Current account mortgages are also, on face value, more expensive as they have higher interest rates than other options on the high street, meaning that many potential borrowers will discard this method before they have fully explored the option. Although it does have a higher rate of interest than the cheapest options available, financially you could be better off as it allows you to pay off your debt quicker. It is particularly beneficial for people who have an irregular source of income for example freelancers or contractors, busy months you can overpay your mortgage and quieter months you can underpay without the fear of penalty.

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