Mortgage Information > Types of Mortgages > Current Account

Current Account Mortgage

A current account mortgage is a combination of a flexible mortgage and a current account. The lender sets a maximum borrowing limit on the account, which includes the balance of the mortgage. As long as the borrower remains on course to repay the mortgage before they retire, they can increase their borrowings by withdrawing money from the current account. A cheque book is issued to facilitate this and money can be withdrawn for any purpose provided the maximum limit is not exceeded.

Each month your salary or other form of income is paid into the account and money is taken out in the normal. At the end of the month money that remains will be used to reduce the outstanding mortgage balance. These transactions are without penalty and because interest is calculated on a daily basis. Providing the outstanding balance is reduced regularly, this would have the same effect as making an overpayment on an ordinary flexible mortgage a Current Account Mortgage has the potential of saving thousands of pounds during its life.