one account

Jojo_2-2 · 30 June 2006 at 12:10PM

does anyone know anything about this? does it really work with shrinking your mortgage? any advice would be really appreciated. we are with c&g at the moment but were thinking of seeing what other better offers we could get on mortgages if we had to swop to save some extra money.

thanks
Jo

brranger · 30 June 2006 at 5:53PM

Is your c&g offset as they have a good product you link to your LLoyds Current Acc and saving for you and your familey members willing to do it.

Jono · 30 June 2006 at 7:09PM

I've got one (excuse the pun!) the idea is great - any additional money you get, pays off the mortgage - however, i've got about a third of my mortgage tied up in Cash ISA's which i can't offset unless i cash them in. Intelligence Finance will allow ISA's as an offset (the only one apparently).
I feel a bit stuck, as if I change the fees will be a high percentage as i have a small mortgage. I think i'm going to stick with the One and ISA's unless they loose their tax free status.

brranger · 1 July 2006 at 10:19AM

When you are offsetting it is effectivley making your savings tax free as you save the interest not gain it you don't get taxed on it,

Also 1/3 of your mortgage is the magis starting number.

Miss_Penny_Pincher_2 · 1 July 2006 at 12:12PM

brranger wrote:

Also 1/3 of your mortgage is the magis starting number.

Excuse my ignorance... but what do you mean that 1/3 of your mortgage is the magic starting number? Do you mean that if you use offset really need around a third of the mortgage amount in offset savings to make it worthwhile?

I don't know much about offset mortgages but the interest rates on the One Account seem higher than other offset mortgages so doesn't look like the best deal.

bunking_off · 1 July 2006 at 2:44PM

...but a One Account isn't a conventional offset.

Because everything is in a single account, you're benefiting not just from off-setting your savings, but also from off-setting all of your money. So, if say your income was £2k a month and you spent it linearly across the month, then you'd be offsetting your mortgage by £2k on payday gradually reducing to £0 over the month (ie average £1k). You can get this with a more normal offset, but only if it has a current account acting as the offsetting account. If it only has a savings account associated, then to mimic this you'd have to be religiously paying your salary into the savings account and drip feed it back to your current as you need it over the month.

The other thing on the One Account is that if you e.g. have £400 left out of the £2k, it automatically acts as an overpayment - it just happens. Where offsets only have a savings account, you have to think about moving the money.

Takes a bit of getting your head around. I wouldn't advocate them for everyone...you have to exploit the features to compensate for the higher interest rate and there's a big risk of frittering your money away on expensive purchases. However, using mine I've cut my 25 yr mortgage down to approx 9 years.

By the way, One Account or Offset, make sure you sign up for all the 0% deals on credit cards and stooze the balance transfer to reduce your mortgage...

bunking_off · 1 July 2006 at 2:54PM

Jono wrote:

I've got one (excuse the pun!) the idea is great - any additional money you get, pays off the mortgage - however, i've got about a third of my mortgage tied up in Cash ISA's which i can't offset unless i cash them in. Intelligence Finance will allow ISA's as an offset (the only one apparently).
I feel a bit stuck, as if I change the fees will be a high percentage as i have a small mortgage. I think i'm going to stick with the One and ISA's unless they loose their tax free status.

Not sure I understand your logic. The critical thing is whether the *net* interest on the savings account is better than the interest rate you're paying on your One Account. In this context the only special thing about an ISA is that the gross interest = net interest as it's tax free.

Of course, there's an argument to say that if you use the money to pay your One Account down you'll only be getting the OA interest rate for as long as you're in debt (ie until you clear the mortgage), whereas an ISA will be tax free forever so by closing that ISA you'll lose the tax benefit. However, an ISA will only be tax free for as long as a certain gent at number 11 decides (guaranteed until 2010?), so personally I'd take the bird in the hand rather than 2 in the bush, and go for whatever gives the best return now.

Joe_Bloggs · 1 July 2006 at 8:23PM

Having just an average £1000 in an offset current or savings account will save £57 in interest on an RBS One Account mortgage. That's 15p a day.
Is it worth paying 1% extra interest on the whole (mortgage - offset savings) ? You have to do the calculations to be sure. Take
into consideration the taxation of savings.

I suspect it is very popular with those with small businesses. Also with those with rental prioperties who can offset interest paid against rental income. The impressive flexibility of The One Account explains the high interest rate .
J_B.

maf20 · 1 July 2006 at 8:37PM

Hi. I'm interested in this one. We have a mortgage of 82k and our take home pay is 3k a month (high other necessary outgoings unfortunately). We only have 2k in savings.Does this sound right for us?

Joe_Bloggs · 1 July 2006 at 8:44PM

To a great extent it depends upon the status of your existing mortgage to say you would benefit. Ordinarily you could get a better deal. The excellent marketing does tend to make everyone think they can benefit. If you had around £30K of savings then you might consider a more competitative offset deal.
J_B.

bunking_off · 1 July 2006 at 9:49PM

Joe_Bloggs wrote:

Having just an average £1000 in an offset current or savings account will save £57 in interest on an RBS One Account mortgage. That's 15p a day.

True, but our collective salaries are £5k, I tend to have £1-2K expenses in and out every month and the outstanding capital's down to £35k at present. Put those things together and chances are this effect alone nullifies the 1% loading for me...without the "latency in getting money into the right account" effect which besets non-current account offsets.

As you say, however, the benefit is the flexibility. We have two "virtual" car loans in ours, one of which I've "virtually" (ie on my spreadsheet) structured so that we take advantage of a manufacturer 0% deal over 3 years, but really only pay off over 5 years - ie debt gradually increases by the differential between what we want to pay & what the repayment to the manufacturer is for the first 3 years, then reduces down to zero over the subsequent 2 years. Try doing that with any other kind of mortgage...

one account

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