Current Account Mortgages
Current account mortgages are a type of offset mortgage.
The only difference is that your current account and mortgage are merged into one.
So, if you have a mortgage of £150,000 and £1,500 in your current account, your statement will show that you owe your lender £148,500.
A current account mortgage example
Current account mortgages are similar to an offset mortgage.
The difference is that your current account, rather than your savings and mortgage, are merged into one.
For example, if you have a mortgage of £150,000 and £1,500 in your current account, your statement will show that you owe your lender £148,500.
For example, imagine you’re earning £3,000 a month after tax, and have a mortgage of £148,000.
While your £3,000 is in the account, you will only be charged interest on £145,000.
As you go through the month and spend some of your pay, your mortgage balance gradually rises, and the daily interest charges increase.
When you get your next pay packet into your bank account, your mortgage balance will once again be slightly reduced, and the interest being charged will fall.
So, with a current account mortgage, the interest charged fluctuates in line with the rise and fall of the amount in your current account.
If you have a repayment mortgage, you’ll pay off more capital whenever your current account is in credit.
- You have the flexibility of using money in your current account to reduce your monthly payments.
- You’re more likely to be paying off your mortgage quicker than with a standard type of mortgage.
- These types of mortgages don’t typically offer you access to discounted rate deals.