LoanShak

In Britain, there is a popular sort of home loan called an offset mortgage, or an all-in-one mortgage. In these cases, the mortgage is combined with savings, and the mortgage is linked to a non-interest bearing account. One of the main advantages is that more of each month’s payment actually goes to principal, rather than to the interest.

An all-in-one mortgage works a little differently in the US, because of the tax structure. However, it can still be helpful. Investopedia offers an example of how an all-in-one mortgage might work:

Dan
needs a $400,000 mortgage at 6%. He has a net monthly income of $7,000.
If he does a conventional 30-year fixed loan, his monthly payment will
be $2,398. After all expenses, such as day-to-day living, the mortgage
etc., he will be able to save $1,000 per month. But if he uses an
"offset" mortgage, the $1,000 per month he saves will be used to reduce
the mortgage balance for interest payment calculations as well.

Assuming
that the rate on the accelerated loan stays constant at 6%, it is
possible for Dan to pay off his loan in just under 15 years and still
have the $1,000 he saved each month as well. It would not actually go
into the mortgage; the lender would merely borrow it while the loan was
being paid off to reduce the principal balance.

Perhaps
most importantly, this type of mortgage can motivate borrowers to
reduce their spending, because they can actually see their funds being
used to pay down their loans.

It is important to realize that this type of home loan requires a degree of fiscal discipline. Otherwise, you could find yourself in large amounts of trouble. Also, a higher credit score may be required, and your mortgage lender may charge a higher interest rate.