Several lenders offer this type of flexible mortgage that is linked to a current account, and is called a current account mortgage. Your mortgage account and your bank account are merged into one and you are issued with a cheque book and cash card just as you would with an ordinary current account.

You pay your salary into the account and a proportion is automatically used to meet your monthly mortgage repayment. You can pay as much off your mortgage as and when you like, according to monthly minimums set by the mortgage lender. You can also use your savings to put against your mortgage, paying the mortgage off more quickly and reducing interest payments.

A current account mortgage allows you to run a current account against the mortgage allowing any money in the current account to offset against the mortgage and reduce the overall interest you pay on the loan. This in turn will reduce the mortgage term.

A current account mortgage is where you put most or all of your financial commitments into one account. So your savings and your income are paid into the one mortgage account and all your debts are combined in the same account. It`s not so much a mortgage, more of a large overdraft that`s secured on your house.

Current account mortgages work by turning your mortgage into a large overdraft. They allow you to set off all the savings you have against all the debts you that owe. You combine all your debts with all of your income in a single current account. So every time your salary is paid in, you reduce the amount of the `overdraft`. Every time you take money out, the overdraft increases. This means you can overpay and underpay without being penalised for it.

The more savings and income you have in your account, the less interest you will pay overall. Since the interest is calculated on a daily basis, you will immediately benefit from any overpayments you make.

At any time you can borrow back some or all of the money you have managed to overpay on your mortgage. These mortgages are ideal for those who are paid regular bonuses so consequently can reduce the mortgage balance quickly.

The good thing about current account mortgages is that the interest charges on all your borrowings are at a cheaper, variable rate for mortgages instead of the more common credit card rates. To compensate for this, rates on current account mortgages, tend to be slightly higher than standard mortgages.

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