Mortgage payment from savings account

Hi All,

Have used this site to guide us through the process of buying a house and we are now a week(ish) away from signing the Loan Offer / Sale Contract, so thank you.

We have a current account with Bank A and the mortgage will be with Bank B.

The question I have relates to the mechanics of paying the mortgage and continuing to save for the rainy day.

I preface this with the fact that we are naive (a 1 bank account family) and hopefully there is a obvious answer and template we should follow.

What we would like - The monthly mortgage amount to be debited from a savings account that earns deposit interest - That's it!

The savings account will start with 10k to 15k and we hope to continue saving into this account (and adding the mortgage amount), as the mortgage amounts continue to be withdrawn. e.g. a "mortgage float" that earns interest.

Does this setup exist, does is make sense what's an alternative approach?

Thanks

In theory simple but in practice you will probably find that your savings account cannot facilitate a direct debit which is more than likely how you will need to pay the mortgage.

As stated above, chances are that the savings account won't facilitate direct debits.

What you could do is setup a standing order to transfer the mortgage amount from your savings account to your current account the day before the mortgage payment is due.

Take a look at the savings best buys to see if any of them meet your needs: http://www.askaboutmoney.com/showthread.php?t=90481

Its unlikely however you'll get a saving accounts that allows DD/SO out.

Thanks All,

Yes, that's what I'm finding no DD/SO on a savings account. Do interest paying current accounts exist?

Let the mortgage be paid out of your current account and have a Standing Order (or manual online transfer if it's a variable amount) into an interest-bearing savings account each month.

LDFerguson said:

Let the mortgage be paid out of your current account and have a Standing Order into an interest-bearing savings account each month.

Click to expand...

Thanks LDFerguson - Yes makes sense. I think I may be trying to make my life too simple. I'm looking for something that does not exist - a Savings Account that allows DD or SOs.

With regards overpaying the mortgage account, my understating is that this can be credited to the account (providing a buffer or float) but that there is no deposit interest earned on this credited amount ?