Current Account Mortgages

Current account mortgages link with your other finances to save you money

In a Nutshell...

• Current account mortgages (CAMs) combine all your finances into one account, effectively linking your mortgage to your account.
• They have flexible features, such as the ability to over and underpay.
• As you don't actually receive any interest on your savings you don't pay tax on them.
• They're suitable for people who are good at controlling their finances.

What is it?

Current account mortgages (CAMs) allow you to have your savings and debts consolidated into one account. They have the features of standard flexible mortgages, such as over and underpayment facilities. As with all flexible products, you need to be good at controlling and understanding your finances to make full use of the features on offer.

Benefits

CAMs work like offset mortgages, the only difference being that your finances are amalgamated into one account rather than having separate current and savings accounts and mortgage debt.

Instead of paying off the debt by making monthly repayments, any money paid into the account reduces the amount you owe - lenders normally stipulate that you pay your salary into the account. Again, this lowers the interest on the mortgage, which could mean paying it off early and saving thousands in interest.

• AII-in-one finances: The balance of your account will always look as though it's thousands of pounds overdrawn. Your lender will be able to show you how your finances break down to bring it all into perspective and show how the mortgage debt is actually reducing. For example, your mortgage might make your account look as if it's £85,000 overdrawn. If you also have £5,000 in personal loans, this then increases to £90,000. However, add on savings of £5,000 and £1,000 in your current account and your balance overall becomes £84,000 overdrawn.
• Cheaper borrowing: Unlike some offsets, a CAM allows all your borrowing at one single mortgage interest rate, which will be far lower than personal loan and credit card rates and overdraft charges. This means you can effectively borrow as much as 99% of your property's value - although this amount varies - at any time. But be careful, borrowing tens of thousands of pounds against your house could lead to serious problems if you usually struggle to repay debts.

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