Current Account Mortgage

Really Making Them Work For You

A current account mortgage (or “Australian Mortgage”) can be a fantastic tool to help reduce your mortgage by utilising savings without having it locked away in the mortgage itself.

It differs from an Offset Mortgage in one significant way
An Offset mortgage provides a linked current account or savings account which is available for daily banking with any savings in that account offset against the mortgage balance. You therefore only pay interest on the lower mortgage balance, saving significant interest over the life of the loan.

A Current Account Mortgage is your Savings Account.
- Meaning that your salary can be deposited - directly into your mortgage
- You can redraw at any time - directly into your mortgage
- Direct Debits – are drawn directly from your mortgage
- Cheques are written – directly from your mortgage

All Transactions happen through your Mortgage – a Single Account

Key Features and Benefits
Interest MUST be calculated daily
Salary MUST be able to be deposited directly
No limit to number of transactions – or at very least have a high limit

How this saves you money…
Simply put, you maximise 100% of your income against your mortgage balance everyday, until that money is spent. You can also delay how long money stays in the mortgage by utilising interest free credit cards, synchronising direct debits and consolidating savings.

How you do it now
Savings £2,500
Interest Rate 3% (being generous)
Annual Earnings £75
Less Account Fees ??
Less Tax – 20% (£15)
Actually Earned £60 per year (if the balance doesn’t drop)

How a Current Account Mortgage Works
What you pay Now!
Mortgage £100,000
Interest Rate 7.5%
Annual Interest £7,500 or £625/mth

With Current Account Loan
Mortgage £100,000
Less Savings (£2,500)
New Balance £97,500
Interest Rate 7.5%
Annual Interest £7,312.50 or £602.38/mth
Saving £187.50 per year
Tax Free (because it’s saving not earnings) Plus no account keeping charges

That’s a 312% better return on your money than having it in a current account.

True Calculations
The true savings over the life of the loan are unfortunately too complex to simulate on-line as each mortgage lender’s product varies with sometimes significant impact on the results. We are currently trying to develop an on-line simulator but you can download an excel worksheet for personal use.

Please re-read the Current Account Mortgage Basics or move on to our Current Account Advice page for further information or review the other Mortgage Loan Types to make a truly informed decision.

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