Advantages and Disadvantages of the Current Account Mortgages

Very similar to an offset mortgage in that a current account mortgage takes the balance in you current account off the mortgage balance. The main difference is that an offset mortgage has a different account for your savings and a seperate on for your mortgage. With a current-account mortgage the two are usually combined into one account.

Here the mortgage lender will draw up a plan on how much you should leave in your account each month. If you leave more in then the mortgage balance will be paid off early. If you leave less in than planned the mortgage will take longer and you will pay more interest overall.

These mortgages are useful for those in control of their finances and with enough income that the tend to leave some in their current account at all times. For those that normally cut into their overdraft each month or who may be tempted to spend extra a current account mortgage could be more of a hinder than a helper.

Advantages and Disadvantages

• The less financially sound person can be tempted to dip into the mortgage and may become over committed.
• If extra funds from wage left in account you can save interest and pay the mortgage off early.  
• Money can normally be withdrawn as well as deposited this could be used for home improvements or a car purchase.  

Who are Current Account Mortgages most suitable for ?

Those who expect to have money left at the end of the month.
Those who may want to pay extra sums into the mortgage by making overpayments.
Those who have good control over their finances.
When is the best time for a Current Account Mortgage ?

When ones incomings are bigger than out goings.
What to watch for ?

Try to ensure that interest is charged daily.
Watch out for maximum overpayment thresholds, particularly if you expect to make lots of lump sum payments into the account.
Ensure you can handle the temptation to withdraw funds at will for other uses or you may end up owing more than you initially borrowed.