All in one accounts
This type of account brings together your:
- Mortgage
- Current account
- Savings
- Credit cards into one account.
Benefits
- As income and savings are paid into the account, the credit balance is set against the mortgage and reduces the mortgage liability.
- Mortgage balance owed and the interest owed on that is reduced
- Monthly payments due on the mortgage are decreased.
An all in one account works like a current account with cash still available in the normal way. A cheque book is issued along with debit and credit cards and monthly or quarterly statements are sent. Any non-mortgage borrowings are included in the account so that interest paid is at a mortgage level, i.e. lower than is usual.
Mortgage payments can be flexible so one month it can be overpaid and another month it can be underpaid. Usually, there is an agreed borrowing limit which works like an overdraft.
Conditions apply, typically, that the mortgage needs to be paid off by retirement, and that the balance must stay within the borrowing limit.
Off-set accounts
Off-set accounts are where the current account, savings accounts and the mortgage remain separate and money is paid into and accessed from the current account in the usual way.
- No interest is earned on any monies in the current or savings accounts
- No interest is paid on the equivalent amount of the mortgage.
Benefits
- Potential to pay less interest on the money owed on the mortgage.
- Any spare cash can be used to pay off the mortgage or to build up the savings account.
