Current account mortgages incorporate all of the features of a flexible mortgage, but take the concept of overpayment to the next level. When you take out a current account mortgage, it is usually a stipulation of the loan that at least one borrower has his or her salary paid into a new current account that is taken out for the purpose of the mortgage.

This allows or forces you to maximise the overpayment effect of your income, with a potentially staggering cash flow effect on your overall interest payments in comparison to a standard mortgage.

All current account mortgages calculate interest daily on the outstanding mortgage debt. This means your salary starts working in your favour as soon as it is paid in. At that point, the outstanding balance of your mortgage debt will be reduced by the amount of your salary - usually well above the amount that you need to pay off on a monthly basis to maintain your repayment schedule. As such, your salary is acting as a temporary overpayment on your mortgage, with the size of the overpayment reducing over the course of the month as you spend your salary.

Any overpayment that is left at the end of the month continues to temporarily reduce your mortgage debt and therefore minimise the interest that is added to the account each day.

Clearly, this means that the more frugal you are, the bigger the potential benefits. Current account mortgages also offer the opportunity for further savings on your interest bill through careful structuring of your monthly expenses. If you can ensure that all your monthly bills and direct debits go out from your account immediately before your salary is paid in, then this maximises the amount of time that the each month's salary is working on your behalf to reduce the mortgage debt.

Since one of the features of a current account mortgage is the issuing of a cheque book and / or a debit card for use with the account, a fair amount of discipline is needed to get the best from the advantages that this type of set up has to offer.

Another feature of most current account mortgages is the setting up of a maximum borrowing facility with the lender, usually up to a certain percentage of the property value. This borrowing facility becomes like a credit limit for the account, allowing you to consolidate your other debts such as loans and credit cards. As long as you do not exceed your limit, these can be paid off and the balance is transferred to your mortgage account.

This facility means that you do not need to pay high credit rates of interest, with the mortgage rate usually offering a cheaper form of finance than is available elsewhere. However, many lenders do not restrict the use of such a facility to debt consolidation, bringing a temptation to use the credit limit to pay for house refurbishments, school fees, cars or holidays. While this is fine if you can afford it, you should be aware that this will have the reverse effect on your overall interest bill to overpaying. If the borrowing on your mortgage account puts you behind your normal repayment schedule, then it is likely to leave you either with larger monthly repayments or a longer mortgage term and therefore a significantly higher overall interest bill.