"The One Account"

Ask about the one account on here and you will find it falls into 2 simple camps, those that love it and those that think it's a rip off with very high interest rates.

I fall into the "love it" camp and just think it cannot be beaten for flexibilty.

Now I know that flexibilty comes at a price, and to me it works out at approx £60 a month in extra interest I am paying similar to the Abbey Flexible mortgage I used to have. So I have to make over £60 a month by various methods to make it worth having the account. Although I don't mind a little extra interest just for the actual account facilities I now have.

I do various things to make this, we do all our spending on a credit card all month and then settle it in full so other than DDs and a bit of cash both our salaries are in the account all month reducing the interest we pay.

I have a couple of 0% credit cards on the go which although in most cases you pay a transfer fee you save overall on the oneaccount interest.

We have a little savings offset, but we also save money for my in-laws in our account. They want instant access and by offering them 1% more than their own instant access account we both "win" from this.

But perhaps the biggest winner for us is that my wife is getting redundancy this year after almost 20 years and will get a payout of approx 25% of the mortage. Now she wants to retrain for 12 months, and the one account is the perfect vehicle for this as it will instantly reduce our mortgage, but we can gradually use this money as if my wife was still working while she trains. There aren't many flexible mortgages that allow this.

Plus for those who question the sums on the shrinker, I have a virtual e-mortgage set within my one account (all done via their excellent online banking system) that if I stick to my initial 20 years will be reduced to approx 9 years at current levels.

So the long and short is yes it is expensive compared to other mortgages, but the facilities to me are worth this extra expense. However be warned you must be disciplined and you must make the money work for you.

I'm in the opposite camp from blisteringblue.

Almost all the moneysaving ideas mentioned by blisteringblue will work equally well with a non-offset, flexible mortgage, which will have a far lower interest rate.

The proportion of the savings in interest most people make from the "One" account's current account offset feature is very small compared to their total apparent savings; this is about the only part which you cannot mirror on any other flexible account.

Given that you are going to pay at least 0.50% more on "One" account than an equivalent, non-offset, flexible account, you would need to save 0.50% on your whole mortgage balance just by offsetting your current account. That's not going to happen unless you have a ludicrous amount sitting in your current account.

The basis of the "One" account's comparisons is completely flawed as it doesn't compare their (high) rate with an equivalent (lower) rate, and then demonstrate that their flexibility gives a reduction in term/total interest/whatever. Instead, they compare their (high) rate with an equally high rate, without the flexibility. There is no such account that has such a high rate but no flexibility!

"One" and similar accounts are best advice for a very small proportion of individuals with very strange patterns of asset behaviour, and are also just about reasonable value for people who are otherwise too lazy to ensure they are getting good value on their mortgage. But for most MSEs, I honestly believe that they are poor value.

silvercar wrote: »

They work well for people who have large sums of savings that they will, or potentially could, need access to in the future. Self-employed with next years tax money needing a safe home is one example.

My offset charges 4.99% fixed; at the time the best non-offset available to me was 4.65%. As I've got about a third of the mortgage value sitting in the offset savings account, I reckon I'm on a good deal!

Silvercar

You should know better than to provide the reason which you have!

Any sensible flexible mortgage will equally well suit someone wanting to offset next year's tax money. Any sensible flexible mortgage will allow draw-downs. So why bother with the complexity (and poor rates) of a full offset?

Your offset is also hugely better value than "One" account.

The one account is great! The rates look high on paper but if you have spare money then you have to go for it. Overpayment is the key to clear your mortgage.

Any one who has a normal mortgage will now say " I can over pay mine also" but you can usually only over pay 10% of the capital per year so after a few years the overpayment is tiny!

I moved to the one account 5 years ago and 18 months ago a paid my entire mortage off. At the age of 33 I had no mortgage. I have now moved (rented out the old house) and have a one account mortage again. I owe 220000 GBP and will have it clear in 5 years.

If you have a spare 1000 a month just see what it will do, try this quick calculator to see the affect of the overpayment:

http://www.binaryincome.com/overpayment.php

Mortgage free life is great, but I bet you will do as I did and just buy another house!

Cheers,

David

One Account is very expensive. There are flexible mortgages and even full offset mortgages at much better rates.