Current account mortgages are becoming more popular

A recent increase in the popularity of current account mortgages has been attributed to borrowers' needs for more understandable and simplistic mortgage options. A current account mortgage takes the form of a bank account but, rather than having an overdraft, the account displays the outstanding balance borrowed. A standard payment is made every month over an agreed term.

One of the main benefits of a current account mortgage is flexibility. Whereas many lenders charge fees for over payment and early repayment, a current account mortgage allows home-owners to pay off as much of the balance as they want each month. Savings can reduce the outstanding mortgage balance which cuts the interest to be paid, but any savings in the account which are used to offset the loan, will not accrue interest.

The flexible nature of current account mortgages gives home-owners access to more affordable borrowing, which enables them to draw on money already paid off. However, it is important to ensure that more money is cleared off the debt than is borrowed to avoid getting into financial trouble. Mortgage terms and conditions will differ between lenders but to ensure monthly repayments are made, current account mortgage providers will request that at least one salary is paid into the account.

Current account mortgages are well suited to borrowers who wish to have all of their financial accounts in one place and, who are confident in the management of their money and spending. Used correctly, a borrower spending less than they earn can effectively overpay their mortgage each month clearing the debt faster, saving thousands in interest.