Active steps to cut our debt

Robert and Ann Burns took out a current account mortgage with First Active earlier this year on the advice of broker John Charcol. Their mortgage is £87,500 at present, but will soon be reduced to just over £50,000 after the couple transfer equity from the sale of two family properties to the account.

The couple have sold their own home and Ann's parents' home. Their new property, a bungalow, is to have an annexe added for Ann's father to live in, and Robert says they have budgeted about £25,000 for that. When that bill is due, they will increase the loan to pay for the work.

Robert and Ann, who have three children, are also paying school fees, and although most have been paid from income so far, they may pay some out of the mortgage. They plan to deposit money maturing from a school fees investment plan that they have not yet needed to the account as well.

Ann is a taxation manager for a firm of accountants, and convinced Robert that it did not make sense to earn, say, 5 per cent on savings when a mortgage would cost more.

Robert is self-employed; he sells insurance to farmers and also works as a recruitment manager for the National Farmers' Union.

His income can be irregular, which is why John Charcol recommended the First Active product, which accepts lump sum payments at any time.

Although the couple were originally looking for a mortgage - and this is still the primary purpose of the product - Robert says that they are increasingly using it as a way to manage savings.

He says: 'With First Active we are paying 4.9 per cent interest. The best rate we could get in a deposit account is 3.5 per cent to 4 or 5 per cent.'

Overall, however, he wants to keep repaying the loan as quickly as possible.

In his part of the country, he says, house prices are not increasing at anywhere like the levels of those in the South-east, and the mortgage seems to remain a heavy burden. This is the incentive for repaying it.

'We seem to be throwing money at a thundering black hole,' he says of the mortgage burden.

His aim is to chop as much off the mortgage as possible with a view to eventually getting rid of it.