What are current account Mortgages?
Current account mortgages are mortgages which are linked to your current account.
They are offered by the bank which you bank with although other lenders might set one up if you chose to transfer your current account over to them.
Current account mortgages are very similar to offset mortgages.
E.g if you had a mortgage of £300k but £30k in your current account then your mortgage statement will show that you have a mortgage of £270k and you will only pay interest on this £270k.
If you send some of the money on your account then the daily interest charged on your mortgage will rise and you will find yourself paying more interest due to taking money out of your account.
The daily interest charge on your mortgage fluctuates in line with the amount of funds in your account. You should ask your mortgage lender whether they take a measure of funds at the beginning of the day or at the close of business day.
Pros of current account mortgages
- You could pay off your mortgage quicker and easier
- You can still spend the money in your account and use it to limit the interest you are charged daily
Cons of current account mortgages
- These mortgages are usually variable rate mortgages with no discounts applied to them
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.