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Current Account Mortgage
The idea of a current account mortgage is to combine all your finances into one single account - your mortgage, current bank account, savings and personal loans.
Any unspent income you have in your account at the end of the month is automatically used to reduce the outstanding balance on your mortgage. Rather than have a separate savings account, any surplus that you would normally save into a separate account in effect goes directly to reducing the total mortgage debt and immediately reduces the amount of interest charged at the end of the month.
These accounts typically allow you to overpay or underpay each month, so you have full control over your spending. If you choose to save some months and spend more in other months, this is not normally a problem. The ultimate aim is simply that the mortgage will be repaid before the borrower retires.
You get a current account cheque book, so you can withdraw cash and spend money like any other bank account. The only rule is that the maximum agreed borrowing limit is not exceeded and the lender will normally expect your salary to be paid direct into the account each month.
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NOTICE: A mortgage is a loan that is secured on your home and you also need to think carefully before securing any other debts against your home. Your home could be taken away by the lender and sold if you do not keep up the repayments on the mortgage or any other debt secured on it - if you are in any doubt, seek independent professional advice. These notes are offered as a general guide only and do not constitute financial or legal advice.
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