Mortgages: Current Account

A close cousin of the Offset mortgage, the current account mortgage (CAM) takes things one step further. Instead of just using the contents of your savings account to effectively reduce your mortgage debt, CAMs roll everything up together. That means your current account, savings, plus any other loans are all under one umbrella. So not only are your savings helping to knock down that debt, but any money in your current account is, too. And though you're probably thinking that your current account is never that full, it still counts, as every pound will help reduce that mortgage debt slightly, however little time it's in the account for.

Now, what's the point of taking into account any other loans/outstanding credit card balances? Well, this is more for your wealth in general. Mortgages are usually the cheapest loan you can have. Therefore, by moving any other, more expensive debt to your mortgage you will reduce the interest you will have to pay. Quite clever, really!

Of course, to get the best effect from a CAM you need to have no other debts apart from your mortgage, and as much cash in your account as possible. And you use a CAM like a current account, paying in and taking cash when you need it. Again, try using an offset mortgage calculator to see how much you could save.

Compare mortgages of all types at the Fool.

Published on November 22, 2006