Current Account Mortgage - worth it?

T

thejuggler

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Has anyone here taken out a current account mortgage offered by First Active (and perhaps others)?

I'm contemplating going for it when we trade up in the next few months. Does it really save you money?

Would like to hear your views.
 
I have had a CAM since April 04 and so far I've reduced the term by 8 months and saved over €2200 in interest! If you don't spend your entire income each month and/or have reasonable savings to lodge to the account it is very good. If you regularly go to a zero balance on your current account then you'd be better off with a good tracker mortgage.

Sarah

www.rea.ie
 
Be careful to assess the savings possible through a CAM versus the higher rate charged by some CAMs compared to more competitive trackers. If the CAM rate is competitive then it's a good way of benefiting from offsetting savings that you don't want to "lock into" the mortgage by making an explicit capital repayment.
 
Is it possible to use a business account with a CAM ?I am thinking about switching but as I am a sole trader my business account would always be healthier than my personal account.
 
Sarah W.


How do you expect to see all these savings made by having a CAM.
Are they calculated as paRT of monthly repayments or will there be a reduction in the lump sum at the end of the mortgage term...

I am sking this because I recently cleared my CAM with F/A and saw no benefit to the fact I had savings in my account for three years which were supposed to be offset against my monthly mortgage repayment calculation.
Has anyone taken a close look at the complication involved in calculation what you have saved by having a CAM...
Because I cleared my mortgage early and I am probably among a tiny number that have ,I have seen this problem...Will alot more people be seeing this problem in 20/30 years time ?????
 
Sorry Zegar - I don't understand your question; what is the problem you see?

I have made the savings because my monthly repayment is based on a mortgage of X but because I have my savings in the same account the actual balance is much much less and therefor I am effectively overpaying whilst still having access to the cash at any time.

Sarah

www.rea.ie
 
For my circumstances it wasn't worth it, as the interest saved was no where near enough to countermeasure the extra €40 a month it cost in interest and approx €10 a month in charges.
That was based on comparing First Active's 3.3% rate against PTSB's 3.1% which has no banking charges.
Also, one financial advisor told me it was no point putting extra money into your mortgage account when mortgage rates are so low as the extra money could be used to get far greater returns by investing in shares, property or forestry. Rabodirect give 3% which is higher than some mortgages.
 
SarahW.
Sorry for being unclear..
If you owe First Active 100,000 and the repayment is E500 a month but you have 2,000 in your F/A account does that E500 monthly repayment reduce because the cam calculates 100,000 - 2,000 = 98,000..So it calculates your mortgage repayment on 98k and not 100 K ????

So as a current account holder should I have seen a reduction in my monthly repayment or a reduction in final payment figure at the end of the mortgage.... ???
 
Ah. I see now. It depends on whether is was set up on a planned or standard repayment. On the former your mortgage payment is based on the full mortgage and disregards any interest savings during the month. This means that your mortgage should be paid off faster as you are overpaying. If you opt for the standard payment (and you can switch between the two options at any time) your monthly payment does take the savings into account and will therefore fluctuate so that the mortgage is repaid over the initial term. Obviously the planned payment will save you more interest but the standard is better if you are on a strict budget. (If you ARE on a strict budget the CAM might not suit though).

Sarah

www.rea.ie
 
SarahW.

I dont think it is possible to verify the savings you can make from a CAM account.
Who among will be able to sit down at the end of a mortgage term and be able to say (1) how much was in their account on a daily basis for a particular month (2) the interest rate for that month (3) if these factors actually applied to the repayment of your mortage.

I think the CAM is wide open and there does not seem to be any easy way for the man on the street to work out if he is getting his entitlement.

I think this particular account will cause trouble in a number of years.I have seen exactly how difficult it is to see if First Active have applied all the CAM rules to my account.The only reason there is not more of an uproar about this is because not many people who opened a CAM are paying their last mortgage repayments....
I really fail to see how any of us with a CAM can work out the savings.....
First Active have the upper hand with this one and we are relying on them to tell us what we have saved on our mortgage !!
 
Well, I (and I presume you did) get a detailed statement each month showing payments in, payments out and total culmulative savings. I don't go through it in detail but it seems to contain all the information I would need to work out the savings. I may be too trusting but I don't think First Active are screwing me.....

Did you notice any discrepancies in your statement?

Sarah

www.rea.ie
 
We got statements of payment in and out .We could see our mortgae repayment coming out every month.The same amount every month unless there was a change in interest rates.But never did I see see any adjustment solely in relation to the CAM....So I was told it would be calculated at the end of the mortagage term...So when I asked for a redemption figure I was given a number..Who could tell if the I had saved anything as far as the CAM was concerned..There was no detail or explaination....My accountant had a look and it was beyond him how anyone in 20 or 30 years time will be able to sanatise the numbers when the finish paying their mortgage..

It is just a warning that it is not a transparent process by any means.
 
Whoever told you it would be calculated at the end of the term is just wrong! The mortgage is recalculated daily to take account of the interest savings. It would appear you took a planned repayment which is why your payments stayed the same each month. If you didn't have much in the way of savings in your account then the benefits would be minimal.

Sarah

www.rea.ie
 
"Also, one financial advisor told me it was no point putting extra money into your mortgage account when mortgage rates are so low as the extra money could be used to get far greater returns by investing in shares, property or forestry. Rabodirect give 3% which is higher than some mortgages."[/QUOTE]

Remember you pay Dirt on this 3% with Rabodirect where as you get the full benefit of 3.29% on all your savings in you CAM.This is a guarenteed 3.29% if rates stay where they but more if rates go up,can you say the same for Forestry/stocks isn't it a gamble which may or may not work out?....reason I know is because the FA bank manager tried to steer me this way...I asked him to give me a product to match 3.29% per year and he couldn't....he could however give me 100's of products which Might match this figure!
 
Depends what you think minimal is ?
Minimal or not the savings should still be there ..
So facts are if it was calculated daily we never saw a change in repayments and the redemption figure did not contain it either..
I was also told it Was "illegal" to have more in your account that you owed ???? :) :)


Also be aware that when you do decided to clear the old first active loan they will not give you a redemption figure for 30 day's after you have handed in your ATM/laser cards...You are advised by the bank to take out enough money to keep you going fo 30 days as you wont have access to you own money !!! Did you ever hear the like.:D :D
 
Sounds to me you should be complaining to IFSRA,if as you say the product they provided you with didn't give you the savings it said it would then you have been defrauded.Some of the statements you have also made i.e.I was also told it Was "illegal" to have more in your account that you owed ???? Can you specify who said this...their mortgage agreement...the advisor...I was told if I owe 100K and have savings of 80 K a couple of years down the line I 'll be paying little or no intereast but all capital....Sarah can you confirm?
 
Our mortgage is an offset mortgage with NIB taken out in March 2005. I inherited some money over the year and am expecting some more, and this is in a current account offset against the mortgage. We will use this money to buy property abroad in the near future, but in the meantime, it is reducing our mortgage.

Or so we thought.

I noticed very early on that our monthly repayment remained constant despite our increased savings. I asked three times how offsetting worked, and I was left with the view that the mortgage interest portion reduces, the capital repayment portion increases and thus the period of the mortgage shortens. But no-one seemed very convincing.

Last week I asked again and, not having recieved any statements regarding our mortgage in 6 months (well, ever really), the girl went off and did a quick check. It turns out that our offset accounts were never linked to the mortgage. Without this link there was no benefit. She immediately admitted this was the bank's mistake and she is currently working out how much we are owed by calculating interest on our savings for every day since March!

My feeling is that our original mortgage advisor just wasn't as familliar with this new product as she should have been, and made an honest mistake. However, catching the mistake was left to me.

We should find out this week where we stand. I'll keep you posted.
 
I am with FirstActive CAM, and even though I had about 10K in the facility account (equivalend of the NIB 'linked account'), I couldn’t see any real difference in the total term of the mortgage (which should come down, as I am on PLANNED type – same monthly payment, but interested calculated as 3.29 of (mortgage - savings).

Now, four months into the mortgage, the latest statement shows that I have saved 1 month in the overall length of the mortgage, which is would work out to around 1000 euros. Of course, that is assuming that I have at least as much money in savings as I have now (what are the chances!?)

I can see how FA statements can be misleading, and I agree, from my experience with them, I wouldn’t trust them to sell 'Big Issue'!
 
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