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CAMs offer consumers the ‘double whammy’

The growth in the number of the UK’s self-employed should be good news for mortgage brokers.

Why’s that? Because the self-employed are one of the key sectors to whom current account mortgages are particularly appealing. But perhaps this is not as widely known as it should be if a survey published earlier in the year in Mortgage Strategy is a true reflection of what mortgage advisers think. It found that only 4% of brokers believed that offset/current account mortgages are best advice for the self-employed. Well let’s take a closer look at this.

The numbers of the UK’s self-employed have grown significantly. In fact, it has grown by 11% in the last nine years. There are now over 3.5 million people who are self-employed with many operating in white-collar self-employment such as consulting, agency and freelance work, with sizeable numbers forsaking office work and retraining in trades such as plumbing that have become more lucrative in recent years. For these people current account mortgages can make a real difference as many are discovering. In 2006, 21% of current account and offset mortgage borrowers were self-employed compared to 16% for other mortgage types.

So what makes current account mortgages so attractive? One of the key benefits a current account mortgage can offer these people is the ‘double whammy’ of ringfencing money to pay their income tax bills and reducing their mortgage interest repayments. They can make sure that they will be able to pay their income tax bills by paying everything into a current account mortgage and then ringfencing the money they need for their tax bill in a virtual pot. By paying all their income in, it immediately makes inroads into the outstanding loan and thus their monthly interest repayments.


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