Re-Mortgage Advice needed !

Daniel_Lee_2

Hi everyone, I`m a new subscriber so please be gentle. I find myself in a predicament, I`ve been advised by a colleague that my personal financial circumstances lend themselves to a 1 account mortgage. I`m somebody who earns a reasonable salary that allows me to live within my means with no debt. I also though receive a substantial annual bonus that I currently hoard within a high interest account. My friend says I`m crazy & utilising a 1 account could save me a bomb ! I`m unsure as I`ve traditionally only had a repayment mortgage & find myself troubled by the thought of not seeing my lump sum savings sitting there for my parousal (very old fashioned I know). I also have occasion to withdraw a significant sum of money throughout the year for holiday home expenses. Does anyone have any advice on these circumstances or as my friend says does anyone also feel a 1 account is the obvious choice ? Any help would be appreciated as I`m at a loss on these kind of financial matters. Thanks for your time.

nick1977

I'm no expert by any means (I'm sure one of them will be along soon!) but if your money is in a high interest account anyway I doubt you are losing much in real terms. You need to look at what the interest rate you are earning is(after tax) on your savings and compare that to the interest rate on your mortgage and that will give you an idea of how much money you are losing out on.

Nick

hydsta

What your friend is talking about is an offset mortgage. Check out the one account website for more details.

Basicly your mortgage and savings are held in one account. The savings in this account are offset against your mortgage so interest is only charged on the balance.

Example: 150k mortgage
20k savings

Savings of 20k would be offset against the mortgage leaving a balance of 130k. So you only pay interest on 130k. While there is no interest paid on the 20k savings, the aim is that you save more per month on your mortgage than you would have earnt in a normal savings account. You would therefore need to work it out yourself using the the interest rate figures for your mortgage and your savings.

To alieve your fears, the savings would not be tied into your account and you can withdraw them whenever you want. Also it will only really be of value if you can maintain significant savings on a consistent basis in the account.

herbiesjp

It does not have to be offset

You can look at fully flexible deals as well - that allow unlimited overpayments, and that allow you to borrow get your money back out if you want

dwsjarcmcd

There are also better offset accounts than the One Account. First Direct, for example, which currently has a very competitive product range.