Current Account Mortgage

How To Choose A Current Account Mortgage

Red TapeWhen you're ready to choose a current account mortgage, it's important to know what to look for. You'll need to know the main features of CAMs and what kind of deal you can get. But before you get that far, you will need to know how current account mortgages work.

Inside Current Account Mortgages

Most people are familiar with the concept of a current account. That's where your salary is paid in every month and where you draw it out to spend over the course of the month. A current account mortgage works on the same principle, but with much larger sums of money. It's one of the family of flexible mortgage products and has been on the UK mortgage scene for about nine years.

AdvertA current account mortgage is often compared with an offset mortgage, because the underlying principle is the same. People can use their credit balances to offset their debts, so that they pay less interest. It's a simple sum: subtract your savings (or current account balance) from your mortgage loan to get the amount you pay interest on.

The main difference with current account mortgages is the way your money is managed. Unlike an offset mortgage, a current account mortgage bundles all of your money into a single financial pot - mortgage, savings, loans, credit cards - the lot. It can be scary, because borrowers have an account that is almost always in the red.

Like other flexible mortgage products, current account mortgages allow borrowers to customise the way they manage their finances. With almost every current account mortgage, borrowers can overpay, pay in lump sums and repay early, though with some current account mortgages, there may be a charge if a preferential rate applies. With some current account mortgage products, borrowers can also underpay or take payment holidays if they have previously overpaid. However underpayments and payment holidays could increase the mortgage term and/or the total amount payable.

Getting At Your Money With Current Account Mortgages

What everyone will want to know, with a current account mortgage, is how they get at their cash and how much cash they can draw out. Again, it's simple. With current account mortgages the lender will fix a borrowing limit. This usually relates to the value of your property, but may also vary according to the regulations of the particular offset mortgage lender. For example, some lenders will allow a current account mortgage holder to draw up to the limit of the original mortgage loan, which may be anything from 75 per cent to 95 per cent of the property value. However, another mortgage provider may be more flexible. and lenders criteria on the amount they are willing to lend changes on a constant basis. Call us now to see what the current maximum lending limits are.

AdvertMost current account mortgage lenders provide a debit card and a card which is like a credit card - the only difference is that current account mortgage holders are still drawing from one account. A cheque book is also usually included.

Current Account Mortgage Deals

There are several lenders who provide current account mortgages. These include Clydesdale Bank, Intelligent Finance, Woolwich and many others. The good news is that current account mortgage holders no longer have to pay interest rates way above the market. Indeed, the difference between current account mortgage rates and standard mortgage rates is shrinking all the time and some lenders make no distinction at all. To be sure you get the best current account mortgage deal, check out our professional offset mortgage brokerage for advice.

Triple Guarantee
Home | Flexible Mortgage Articles | How To Choose A Current Account Mortgage