First Active yesterday added to the clutch of new mortgage products on the market with the State's first current account mortgage account.
Instead of earning little or no interest, the balance on the current account is deducted from the mortgage debt, cutting the amount of mortgage interest payable.
Interest owed on the mortgage is calculated on a daily basis, so customers benefit immediately by crediting money such as a salary to the account.
Any money left in the account at the end of the month after day-to-day expenditure and the normal monthly mortgage repayment is classed as an overpayment and reduces the balance of the mortgage automatically.
These overpayments remain available to customers at any time or can be used to shorten the term of the mortgage.
Customers will receive monthly statements outlining the amount still owed, the interest savings and the period of time any overpayments may have knocked off the mortgage term.
Equity can also be released in the form of pre-approved overdrafts and additional funds such as car loans.
The interest on these overdrafts and loans will be the same as First Active's standard variable homeloan rate, currently 4.24 per cent (APR 4.3 per cent).
First Active guarantees that this rate will never be more than 1.5 percentage points higher than the European Central Bank (ECB) base rate.
Mr Brendan O'Hora, marketing manager for First Active, said it was not in a position to offer a fixed rate on the mortgage at the moment, but that this might be reviewed later.
Mr Des Fitzgerald, general manager of sales and marketing, said First Active's research indicated people felt they were receiving poor value on their current accounts.
The current account mortgage was a way to "put their credit balances to work" and avoid paying typical overdraft rates of 11 to 12 per cent, he added.
Customers can use direct debits and standing orders and make withdrawals through ATMs. Laser cards will be available from July. No chequebooks will be issued, but cheques will be available from branches.
