One account woes

bad_at_moneymatters

Hi all

I am clueless when it comes to money and basically just hope we have some at the end of the month, In a quest to try and rectify this I want to try and sort the finances.

We have Oneaccount with virgin one, which I dont think really suits us as we have no savings but was a good option at the time we took it as we had inherited some cash.

We currently have a 60000 mortgage charged at 6.7% on the one account, and we pay interest only. so works out about £350 per month

Our house is worth about 250000, and we want to consolidate about £5k back into our mortgage, thus we are looking for about £65000.

what is the best way to go about this. We have not had the base rate reduction from RBS which is giving me the incentive to move mortgage, and i dont particularly like the oneaccount way it works as find it difficult to know what we are paying off etc..

I want to look at the best way to reduce our mortgage, without increasing our payments too much but really dont know where to start. i also want a normal bank account not the offset style as i dont think we actually benefit.

My other thought was to just transfer some spending money from the one account to a normal current account and just live off that to ensure we try and keep as much money in the account as possible to utilise the offset.

We only have one wage as I am a stay at home mum so dont have loads of extra cash at all. BUt i felt that if we get rid of some of the debts by consolidating we could switch to a better rate and move it onto a repayment type mortgage to ensure we pay our mortgage off at some point too !!! dont want to still be paying it when i am 80 which at this rate we will be !!

help !!!

Mr_helpful

This site cant give advice but you swhould speak to an independent mortgage adviser that gives free advice. There are still some about

rinkydinkpanther

The rate cut for the One account takes effect from 1st Nov. Basically, the One account is just like a huge overdraft, so you will currently have a balance of minus £60,000. In order to pay it off, you need to leave money in the account every month (as well as paying your interest) until your balance gets up to zero. Depending on how you set the account up, your maximum "overdraft" facility may reduce each year.

It can be a great account if you understand it and are financially disciplined, but it does sound as if you might be better off with a more traditional repayment mortgage that will require you to pay enough each month to pay off the mortgage by the end of the term. Depending on how long you take the mortgage for, you're going to need to be able to find at least another couple of hundred pounds a month to start paying off the capital.

UK007BullDog

get a regular repayment mortgage. The one account only works for high earners and very disciplined savers who pay off a chunk every month. As you are only paying interest it is actually costing you more each month than like a regular mortgage.

bad_at_moneymatters

thanks for the advice,

I saw a IFA who suggested a Nationwide offer but it has a high early repayment charge which worries me should interest rates shoot up in next few years.

I have since looked at FD lifetime tracker which works out well at .99 over base rate but has fees of £499 and also Woolwich tracker and this appeals as has no fees but higher rate of 1.29 over base rate...

definetly prefer the idea of seperate accounts, the One account could only really offer extending our length of mortgage time and being more disciplined !! there in lies the problem !! LOL

thanks again, think I am drawn to the first direct one, but going to check both out on monday,