Current Account Mortgage/Offsets
Current Account Mortgages (CAMs) and Offset mortgages are simply flexible mortgages that allow you to link your savings and your current account balance with your borrowing to reduce the amount of interest you have to pay and the term of your mortgage.
How do they work?
The principle behind CAMs and Offsets is that it doesn't make sense to borrow at a high rate of interest when your savings and current account balance are earning much lower rates of interest.
CAMs and offset mortgages overcome this by allowing you to link together say, your current account and your savings account with your mortgage and sometimes other borrowing too, such as your credit card balance.You use your savings and money in your current account to offset your borrowings, which means you reduce the amount of interest you pay overall.
For example, if you have a £70,000 mortgage and £10,000 in a savings account, you'd pay interest only on £60,000. You wouldn't receive interest on your savings, but your savings are used to reduce your mortgage balance and so save you mortgage interest. So, in effect, your savings are earning the mortgage rate of interest and, moreover, you would pay no tax on this 'return'.
By linking your savings and current account to your mortgage, you can shave years off your mortgage and reduce the amount of interest you pay.
CAMs and offsets come with flexible features including overpayments, underpayments and daily interest (each mortgage will offer its own range of flexible features and will have different restrictions, so make sure you read the details before committing yourself).
What's the difference between a CAM and an offset mortgage?
With a CAM you get one statement which shows how much you owe overall rather than separate statements for your current account, credit card etc. Some CAMs require you to credit your salary to the account.
An offset mortgage works in the same way as a CAM but the way it is presented to you, as a customer, is different. Rather than lumping all your different accounts into one, your accounts are kept separate, making it easier for you to keep track of your finances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
We can be paid by commission or a fee. The precise amount will depend on your circumstances but will be typically around £500
The Financial Services Authority does not regulate some forms of Mortgage.
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