Would you like to consolidate your mortgage debt with your other bank accounts? Do you want to save thousands of pounds in interest payments? Do you want flexible mortgage options?
If so, a current account mortgage might be the right mortgage for you.
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Current account mortgages (CAMs) are very similar to offset mortgages. They both allow you to use the money in your bank accounts to save on interest payments towards your mortgage. For example, if you have a £200,000 mortgage but you have £50,000 in savings, you only have to pay interest on £150,000. For further details, please see offset mortgages.
The big difference between an offset mortgage and a CAM is the fact that a CAM combines all your earnings and your mortgage debt into one pot, whereas an offset mortgage separates them into different sections. A CAM treats your mortgage like an account overdraft.
Your mortgage debt appears on your bank statement as a massive deficit. Therefore, when you check your account you will see a large negative amount. This may be shocking at first, but remember that this negative amount will decrease each month as you pay off your mortgage. This feature may help discourage bad financial decisions since you constantly see how much money you owe.
Your salary is added into your CAM and you can withdraw money whenever you want. At the end of the month, any money left over from your salary is put towards your mortgage payment. Therefore, it would be wise to move any direct debit payments and standing orders to the end of the month so that you keep the maximum amount of money in your account for the entire month to save the most on interest.
Lenders use daily interest calculations to help reduce your mortgage debt, so you will save the most by keeping as much money as possible in your account. In order to save more money, you also may be able to offset your credit card debts and personal loans that typically have higher interest rates than your mortgage.
You are provided with a current account, a chequebook, and a debit card. You can also set up standing orders and direct debits. A CAM does not limit you to your CAM current account; you're allowed to have another current account elsewhere if you need it.
The same features of the flexible offset mortgage are offered in the flexible current account mortgage:
The One Account, a product from the Royal Bank of Scotland, offers the only true available CAM at the moment. You can access the One Account at www.oneaccount.com or through NatWest (as the NatWest One Account) and Virgin (as the Virgin One Account). However, if you want to compare current account mortgages with another offset account to determine how to save the most money, you should talk to a professional mortgage adviser who will sort out the best deal for you.
To get the best advice and compare the complex terms & conditions of current account mortgages and their offset companions, use our mortgage advice enquiry form to be put in touch with a mortgage adviser. They will call you right back to answer all of your questions, give you current account mortgage advice, and get you on your way to buying your home.
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