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Is a UK Current Account Mortgage Right For You?

Is a UK Current Account Mortgage Right For You?
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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin24 Jan 2024

Is a UK Current Account Mortgage Right For You?

Current account mortgages are an exciting option for leveraging your income and savings against your mortgage cost - and are often much less well known about than traditional mortgage products.

Here we'll explain what a current account mortgage is, what it offers, and whom it might be an attractive option for.

If you'd like to learn more or discover the current rates on the UK market, give the Revolution Brokers team a call on 0330 304 3040, or drop a message to [email protected].

How Do Current Account Mortgages Work?

A current account mortgage balances how much you owe against the activity in your regular current account - and so combines your everyday banking with your mortgage balance.

The core benefit is that you streamline your finances into one place, and have one balance due for repayment.

As an illustration, if you owe £150,000 on a mortgage but have £5,000 in your account, you will show a net balance of £145,000 overdrawn. When you receive income into your account, the debt automatically reduces by the same amount and likewise increases when you spend money.

There is still a monthly repayment, and a mortgage term agreed as part of the contract. However, when you have cash in your current account, you reduce the interest you are paying and potentially reduce your mortgage term.

Who are Current Account Mortgages Best For?

As with any flexible mortgage, the interest rates on current account mortgages are higher than standard - but if you tend to earn more than you spend each month, you can quickly chip away at the mortgage balance with small, monthly repayments.

This sort of mortgage is ideal for people with a regular income who wish to pay back their mortgage as quickly as possible, and expect to make contributions towards the mortgage balance each month in addition to the scheduled repayment.

How Much Do I Need to Earn to be Eligible for a Current Account Mortgage?

Most homeowners who choose a current account mortgage earn a high income. That is because your salary needs to cover your usual outgoings, and your mortgage repayment, plus a surplus to make it worthwhile paying the heavier interest charges.

What are the Eligibility Criteria for a Current Account Mortgage?

Lenders will look at the usual criteria to assess whether you are suitable for a current account mortgage - that includes factors such as:

  • What deposit you have available.
  • How high the Loan to Value ratio is.
  • Your age and credit rating.
  • What sort of property you wish to buy.

Which UK Lenders Offer Current Account Mortgages?

Many lenders offer this sort of loan - Revolution Brokers works with niche lenders as well as well-known high street banks, including:

  • Barclays
  • Clydesdale
  • Danske Bank
  • Halifax
  • HSBC
  • Lloyds TSB
  • Nationwide
  • NatWest
  • RBS
  • Santander
  • Woolwich
  • Yorkshire Bank

It is always advisable to apply via an experienced broker, who will be able to clarify whether you meet the legibility criteria before you apply.

Where Can I Find the Best Rates on a Current Account Mortgage?

Many lenders do not publish public rates - as these are so dependent on the applicant's circumstances.

In other cases, published rates are solely indicative, and don't mean that you will be offered that rate if you apply for an advertised mortgage product.

Therefore, the best way to get a reasonable comparison about which current account mortgages are right for you is to consult a whole-of-market broker who knows the market.

Expert Advice with Current Account Mortgages

Business loan broker negotiates thousands of mortgages every year, from high net worth individuals to companies and people struggling to find lending due to bad credit.

As an independent broker, we negotiate terms with a vast range of lenders from across the mortgage market. We are always on hand to offer guidance about which financial providers are best suited to you.

Give us a call on 0330 304 3040, or email the team at [email protected].

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.