The One Account - can anyone tell me if I'm going mad?!

VfM4meplse

wymondham wrote: »

Exactly correct, whatever is left at the end of the month is considered your mortgage payment - nothing happens with it though, it stays in the account, but your account moves nearer to credit by this amount (they do take an interest payment each month, and this is the only money that 'goes' anywhere..)... it's an odd concept to get you're head around, but it works very well for some (including me )

Worked for me too :j ! Can't rate the account highly enough:T .

getmore4less

Cleaver wrote: »

Correct!

I'm thinking their calculator is a bit misleading.

Once you realise that the normal mortgage payment is included in the spends it makes sense.

Designed to try and make the One account look a lot better than it is.

anyway since you will probably be taking a better product from a different lender it does not matter.

Gorgeous_George

What seem to be clear is that One Accounts' calculators are misleading, full of ambiguity and designed to fool people into paying a higher interest rate than is available elsewhere.

The benefits are:
1. you 'earn' interest tax free at the mortgage rate on the attached current and savings accounts

The downside are:
1. Interest rates are high
2. Calculators are misleading
3. Need a degree of self-control.

I prefer my offset tracker currently at 5.74%

GG

Gorgeous_George

What has happened to the £2,300 per month that you haven't needed to spend up to now?

GG

Cleaver

Gorgeous_George wrote: »

What has happened to the £2,300 per month that you haven't needed to spend up to now?

GG

We save it each month. We have around £14,000 in two ISAs and the rest in a savings account.

We got our first mortgage in 2004 which isa 4.84% fixed rate until 31 December 2008. It's a good rate I guess, but it's frustrating as we cannot overpay anything on it. So we're paying off a big lump sum at the end then planning to move to a product such as The One Account.

We have no credit cards, loans or another type of borrowing.

bubblesmoney

http://www.jeacle.ie/mortgage/uk/

try playing around with this calculator. i fed in 54k mortgage and 6.7% and decreased the term to 2 years and it gave me a monthly payment of £2410.38. so it is workable if u keep to £2410.38 total payments per month into mortgage

how ever if u feed in 5.99% life time tracker rate of hsbc (fee free, valuation free) for the same mortgage u can still pay it off in 2y but with a lower monthly payment of £2390.88, which is a monthly saving of 20£ which can give u extra life insurance cover during the time or get u 1100mins monthly (on 18month contract) cross network mobile contract with 3network or anything else that u want to do with the 20£ monthly saving if u dont go with the one account.

ps: am not sure if the hsbc tracker is only for mortgages or for remortgages as well

Gorgeous_George

The interest rate is the most important aspect of a mortgage. Fees need to be considered and the ability to overpay is important.

There is no reason why you would want to overpay a 4.84% mortgage unless you have used up your ISA allowance or you are a higher rate taxpayer. Equally, it would be better to cash in your ISAs and reduce the forthcoming mortgage to as low as possible as most ISAs do not pay 6.7% (or should it be 6.6%).

It would still be better to go for something like a 2 year mortgage with a lower interest rate IMHO.

I think I've cracked the calculator conundrum!

I guess that you told it you have 21 years left on your mortgage (it assumes this is £54,500). It tells you that your repayment is £400.22. The calculator adds £2,300 to the mortgage payment making a repayment of £2,700.22 each month. Finally, by flatlining your monthly spending, you have an average balance of £950 which brings in a further £5.23 per month which is added to the repayment.

That gets the term down to 1 year and 10 months. The final 2 months are paid when your £4,200 monthly salary is deposited.



GG

Cleaver

Gorgeous_George wrote: »

The interest rate is the most important aspect of a mortgage. Fees need to be considered and the ability to overpay is important.

There is no reason why you would want to overpay a 4.84% mortgage unless you have used up your ISA allowance or you are a higher rate taxpayer. Equally, it would be better to cash in your ISAs and reduce the forthcoming mortgage to as low as possible as most ISAs do not pay 6.7% (or should it ne 6.6%).

It would still be better to go for something like a 2 year mortgage with a lower interest rate IMHO.

I think I've cracked the calculator conundrum!

I guess that you told it you have 21 years left on your mortgage (it assumes this is £54,500). It tells you that your repayment is £400.22. The calculator adds £2,300 to the mortgage payment making a repayment of £2,700.22 each month. Finally, by flatlining your monthly spending, you have an average balance of £950 which brings in a further £5.23 per month which is added to the repayment.

That gets the term down to 1 year and 10 months. The final 2 months are paid when your £4,200 monthly salary is deposited.



GG

That seems to crack it!

You're right about having a good deal. However, I believe people on here refer to it as a 'lightbulb moment': mine was our last mortgage statement which said that we had paid around 26.5K so far to the building society, of which around 8k was capital and 18.5k was interest. I was like, "Right, that's it, this debt is going!".

Thanks for everyone's help and advice with this, it's really appreciated.

getmore4less

Think seriously about keeping that ISA money intact.

ISA give tax free benifits for life , paying of the mortgage only for the life of the mortgage which is going to be much shorter in your case

Your excess cash is well in excess of the ISA allowances so you will end up with savings that are taxed if you move all your money to the mortgage.

KEEP THE ISA and continue to max out each year it will save you in the long term.

If you still want to offset the money in the ISA then find a lender that allows the cash ISA to be offset like Barclays, yet another reasion to AVOID the One account.

Gorgeous_George

gm4l makes a good point very well.

It is worth considering keeping the ISAs but it also worth finding a mortgage with a lower rate.

Good luck with whatever you do.

GG