A current account mortgage, or offset mortgage, allows you to deduct the savings you hold from the capital of your mortgage. This can be done through a number of methods, but typically in the form of a current account into which your income is paid and outgoings taken out of.
The balance of this account is deducted from the capital of your mortgage, with interest calculated on a daily basis. This allows a current account mortgage holder with disciplined saving to achieve potentially lower interest repayments.
Current account mortgages may not necessarily be for everyone, as they can charge higher rates of interest when compared to other types of mortgage. However, for those with savings or an amount of surplus income, they can provide a faster and cheaper way of paying off a large mortgage. By completing our mortgage enquiry form you will recieve:
- Professional mortgage advice from an authorised UK mortgage adviser
- Quotes on leading UK mortgage deals
- A fast and friendly response
If you need to find out more, use our Guide To Current Account Mortgages. Or, see below for other mortgage options.
Some additional points about current account mortgages include:
- The current account and the mortgage would be combined, so you would receive one statement and balance for both
- For instance, if you had £1,000 in your current account and owed £90,000 on your mortgage, your balance would read as -£89,000
- Your balance would be calculated every day, and you pay interest only on this balance
- You may also be able to combine savings into this bank account, to further reduce your debts
- You could also add other debts, such as from credit cards or other loans, to this account; typically, the same level of interest will apply to these as the mortgage.
Opening your current account for a mortgage could be beneficial to you as it could allow you to place all of your debts into one account. By using your current account balance to offset your mortgage, you could also pay less interest. If you are unsure of your options you should seek independent financial advice.