With most current account mortgages, any overpayment into the account will save interest at the prevailing mortgage rate, which is often higher than many normal current and instant access savings accounts. And because interest is calculated daily, the benefit is felt immediately. Taking this more flexible option means that borrowers can overpay by any amount and whenever suits them best and because the overpayment is reducing their mortgage debt the money saved in the account is effectively tax free.
Rachel Ramsden, head of marketing at Britannic Money, said: "Instead of putting tax money into a lower interest paying account, where you often have to give notice to withdraw the funds, self employed borrowers should put their cash into a CAM®. This is a no risk home for spare cash and is effectively a tax free savings vehicle with guaranteed immediate access."
She added: "With the low interest rate environment which has driven savings rates down, coupled with stock market uncertainty, anyone with money to invest would do well to look at reducing their mortgage - this offers the best rewards long term as the savings made in mortgage interest far outweigh returns offered by savings accounts."
