| Current account mortgages are a type of | | | | |
| flexible mortgage and they have been around | | | | In general, you will find that you pay for |
| for well over 10 years in the UK. Current | | | | the flexibility of a current account mortgage |
| account mortgages work by combining your | | | | through a higher rate of interest than more |
| mortgage and current account into a single | | | | traditional mortgages and because the lenders |
| account. For example, if there is £3,000 | | | | are also taking a risk with current account |
| in the current account and the mortgage is | | | | mortgages. They will make less money on the |
| £100,000 the balance in the account will | | | | mortgage if you pay it back early, or they |
| show £93,000 overdrawn. The balance is | | | | might not get the money back if you are |
| calculated daily and the homeowner only pays | | | | unable to discipline yourself and make your |
| interest on the balance. Any saved income you | | | | repayments. A current account mortgage works |
| have in your current account at the end of | | | | both ways and if you get it right, in |
| the month is automatically deducted from the | | | | particular the management of it, then it will |
| mortgage debt you owe. If cash is allowed to | | | | benefit both the lender and the borrower. |
| build up in the current account mortgage, the | | | | |
| savings on interest payments can be | | | | The Downside of Current Account Mortgages |
| significant. For maximum gain, bills can be | | | | |
| synchronized to be paid at the end of each | | | | The downside with current account mortgages |
| month. Every time money goes into your | | | | is financial discipline. You need financial |
| current account, you reduce the amount of the | | | | discipline and planning to properly maintain |
| overdraft and every time you take money out, | | | | current account mortgages and to be able to |
| the overdraft increases. | | | | resist the temptation to use the large sums |
| | | | of capital available. |
| Current account mortgages allow the interest | | | | |
| charges on all your borrowings, including | | | | The amount of debt visible on the current |
| credit card debt, to be at the cheaper | | | | account balance, in the tens or hundreds of |
| interest rate of the mortgage, instead of the | | | | thousands, can also be intimidating to |
| average credit card or loan rate. So you can | | | | borrowers when viewed on a daily basis! |
| save money in the long run, you still need to | | | | |
| pay off the non-mortgage debt as quickly as | | | | Benefits of Using an Independent Mortgage |
| possible. If you simply add these debts to | | | | Broker |
| your mortgage and pay them off over 25 years, | | | | |
| instead of 3 or 4 years, overall you'll pay | | | | Due to the range of current account |
| more interest. | | | | mortgages, independent mortgage brokers can |
| | | | advise and give you information, as well as |
| Different features with Current Account | | | | being able to judge suitability for having a |
| Mortgages | | | | current account mortgage. |
| | | | |
| There are a wide range of current account | | | | Conclusion |
| mortgages in the marketplace. Different | | | | |
| current account mortgages come with different | | | | Current account mortgages combine your |
| features such as overpayments, payment | | | | current account and mortgage into one |
| holidays, underpayments and credit card and | | | | account. They offer flexibility with options |
| loan facilities. Some current account | | | | such as overpayment which can allow you to |
| mortgages include a restriction on | | | | pay off your mortgage quicker. Although |
| withdrawals, overpayments and underpayments | | | | current account mortgages are fairly new in |
| and some include fees and charges, such as | | | | the marketplace, their popularity is |
| early redemption penalties. | | | | increasing as more home owners recognize the |
| | | | benefits they offer. |
| Interest Rates | | | | |