Current Account Mortgage
'Offset', or 'Current Account' mortgages combine your mortgage account with the money you hold on deposit in your savings / current account. This means you owe less to the lender and are consistently 'over paying' on the mortgage.
The result - an excellent vehicle to repay your mortgage off early!
Your home may be repossessed if you do not keep up repayments on your mortgage.
For mortgage advice you can choose how we are paid: -
- No fee. We will receive commission from the lender when your mortgage completes.
Or
- A fee. A fee of typically £580 payable on completion of your mortgage. Any commission received from the lender will be refunded to you.
Or
- A combination of a fee & commission. A fee of typically £280 payable on completion of your mortgage In addition we may receive commission from the lender.
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Current Account Mortgage
For the past 8 - 9 years, the benefits of a Current Account Mortgage have been recognised by the most 'savvy' of mortgage borrowers.
There are a number of schemes to consider, these include 'current account' schemes, 'flexible mortgages' and 'offset accounts'. All three share many similar features and benefits, including: -
- The provision of a “reserve” amount, or the amount you could draw on if you wished, similar to a cheap overdraft facility up to a guaranteed amount.
- You can take money out, or put money in however you like.
- All positive balances in your 'reserve' account and used to reduce your mortgage debt.
Imagine your mortgage amount is £100,000. But because you have on 'deposit' an average of say £10,000 each month (this may include your monthly pay and other savings). The balance owed on your account is in effect £90,000. Your monthly mortgage repayments (on the £100,000) mean that you are consistently making over payments (of 10%). Significant savings are made as a result of the mortgage being paid off early.
We can illustrate these savings by making various assumptions to reflect your possible circumstances.
- A further benefit is that the effective rate of interest you earn on your 'deposits' is the same as the mortgage rate. So, if the mortgage rate is 7%, your 'deposits' are also effectively earning 7% - tax free!! This is equivalent to 8.75% pa gross for a basic rate (20%) taxpayer, or 11.67% pa gross for a 40% taxpayer. It would be impossible to find a better savings rate than this!!!
- Interest on the amount of mortgage outstanding is calculated daily.
With all financial planning we must balance these benefits with the possible downsides: -
- The scheme provider will provide a maximum borrowing 'facility' (usually based on a percentage of the value of your property), and in the 'wrong hands' such a facility could soon see borrowings increased to the maximum mortgage / 'overdraft' facility.
- Monies held 'on deposit' are not increasing by the addition of interest payments from the account provider.
- The effect of the savings benefit must be offset by any “loading”, or higher mortgage rate charged by current account lenders, compared with an alternative, competitive mortgage product.
Your home may be repossessed if you do not keep up repayments on your mortgage.
For mortgage advice you can choose how we are paid: -
No fee. We will receive commission from the lender when your mortgage completes.
Or
A fee. A fee of typically £580 payable on completion of your mortgage. Any commission received from the lender will be refunded to you.
