one account?

My wife and I have had a "Virgin" One Account for about 6 or 7 years now, and it's been absolutely fantastic!

OK, it surely doesn't have the best intrerest rate, but in terms of the flexibility and simplicity that it offers, I'm sure that it can't be beaten.

Assuming that the initial deal is the same as we got, then they value your property and, subject to your income, they agree a maximum limit that you can borrow up to at any time - without asking.

So, for example, if you have a house worth £200,000 then they may allow you to borrow upto say £150,000. Your existing mortgage may be only £125,000 and you may be lucky enough to have savings banked elsewhere at say £25,000.

So, you open a One Account, transfer your existing £125K mortgage and £25K savings into it and, hey presto, you now pay interest on just £100K at the agreed rate. OK, so you lose the saving interest, but that was a poorer rate than your mortgage rate anyway, and you got taxed on it. Technically you are now getting a higher, tax free, rate on it - difficult to explain?

Basically, your saving are helping to keep the mortgage interest low - but you can get at them whenever you like.

If you want to pop over to Bulgaria and buy a small town, you just write out a cheque, and as long as that doesn't go over your agreed limit (£150K) then nobody cares!

We used some of our allowable credit to fund deposits on Buy-To-Let flats, which we now rent out and take an income from :-)

If you get any 0% (or lower than the One Account interest rate) credit card balance transfer offers, the grab them quick. Stuff all the free (or pretty cheap) cash into the One Account to knock your mortgage down a bit for 6months or whaever the offer period is, then pay it straight back to the card again - saving £100's of interest along the way. It's great!

The only stipulation we got when we opened the account was that the mortgage had to be paid off by the time that we retire (65?), but there are no monthly payment/repayment requirements at all, you don't need any endowment, but probably need life cover though.

Feel free to PM me if you have any more questions - I can't recommend it highly enough - It's worked for us.

Inspector-Gadget

crazymum wrote:

We have a one account too, have had one for the past 6.5 years, absolutely fantastic, we wouldn't change it for the world. I echo everything said above, also the call centre always answers the phone immediately and are always very helpful. When we wanted to change to a repayment mortgage and change our facility amount recently it was all done over the phone and took about 5 minutes. Their service is second to none.
You can also use any cash point machines without charge.
Once you have one of these accounts you'll never want anything else.

With respect to the above posters, The concept of a flexible mortgage is what you rave about, and sure, a great admin set up is essential. But, next to these, rate is the driver and they are not the best.

It' s a little like me raving about my Tom Tom Go, when really it's Satalite navigation that i should really be wax lyrical about.

bunking_off wrote:

The advice on the One Account - as with all current account mortgages - is that it's great if you're willing to exploit the flexibility and are disciplined enough not to go & buy half of eastern Europe on a whim. For me, it's meant that my 25 year mortgage will be paid off in 11 years, and I have two rather nice cars, with the finance costs being a couple of £k less than they would have been had I been relying on conventional loans.

Couldn't agree more- from a broker's perspective, it's all about the mentality of the client, and unfortunately, we, well me at least, aren't trained psycologists.

But there are better rates out there.

A little pointer about the competitiveness, but not the only reason, is that when i arrange a one account mortgage through RBS they pay me 0.70% of the advance, compared to an average flexi loan proc fee 0.4-0.5%.

Can't recall all the values (depends on the size of the facility - NB facility, not outstanding balance - compared to the house valuation).

For my circumstances - facility <50% of house value - rate is 5.6%. Think it goes up by approx 0.5% by the time you get to 95% facility.

Given our combined incomes knock 10% of the capital at the beginning of the month then the balance gradually goes up over the month, on average the balance is 95% of what it would have been with a conventional mortgage (ie outstanding fluctuates from 90% to 100% of total notionally left across the month), so defacto that rate becomes 5.3%.

I then have half of the money stoozed onto 0% cards. So I guess defacto I pay just under 3% net. Of course, you don't need a One Account to do this...it just makes it easier.

I don't doubt that the cheapest approach overall is to get the best 2 yr discount, then remortgage when it expires (with a lower starting point each time to net make an overpayment). However, that initself requires a discipline that I don't believe most people follow in practical terms. How many people on discounts have the odd month at SVR before they remortgage? How many don't plough all of their spare money into overpayments, but instead effectively waste it by e.g. putting it in deposit accounts? (Even worse how many have outstanding balance on non-0% credit cards?). The other issue for me is that the setup & exit charges on mortgages are gradually creeping up. On my level of borrowing, £500 setup/valuation fee on taking out a new mortgage is like the rate being 0.5% higher. Setups are bad enough....the concerning thing is that you never know what you're letting yourself in for on exit charges...

As others have said, it's all very much down to what suits an individual best. I don't doubt that RBS make their money on the One Account via a combination of people who take one out then use it like a conventional mortgage, and people who take it out then lack the discipline not to borrow to the hilt.

The idea is good, but their basic interest rate is 5.7% (http://www.oneaccount.com/onev3/rates/toa-rates.shtml) and that's not much cop compared to the 4.4% repayment mortgage I'm looking at.

Personally I'm going to use a std repayment mortgage, any savings will go into accounts paying more than 4.4 after tax (ie: ISAs and reg savers), other excess funds will go into overpaying the mortgage.