A Current Account Mortgage - the ins and outs...

One combined balance to pay

A current account mortgage combines both your mortgage and current account, giving you one combined balance to pay. For example, if you have £4000 in your current account and a £180,000 mortgage, you are technically £176,000 overdrawn. So, when your wages get paid into your bank, your debt will reduce to its smallest amount but will increase again once you start paying your monthly expenses. You will make a repayment each month over a term that you choose and the additional money in your account acts as an ‘overpayment fund’, which means that you technically pay off your mortgage quicker.

If you’ve got any additional savings, you could reduce the balance even further, or if interest rates are low, you could also transfer things like your credit card onto it, too.

For

The main benefit of a current account mortgages is that, if you spend less than you earn every month, then you will essentially be overpaying on your mortgage every month, thus clearing it quicker. However, you need to remain organised with this sort of mortgage and decide whether you will be happy to be constantly overdrawn.

Against

The interest rates on a current account mortgage tend to be a lot higher than usual, and for them to work well, you will need to have a large income coming into the account every month, as well as having spare to cover the current account monthly payments.

If you’re thinking about getting a current account mortgage, speak to one of our specialist advisers who will be able to walk you through the process.