one account?

tomstickland

I'm arranging a mortgage with a monthly overpayment facility.

Mortgage rate 4.4%
Best inst access savings accounts pay 5.1%, so after tax they're below 4.4%, so not much use. 5.1% ISAs are obviouslly ahead of the game, as are 10% reg savers.

I'm also going to use stooze money (0% credit) to do some external offsetting. ie: £5000 in a 4% net payer will reduce the interest on £5K of my mortgage down to 0.4%.

Eg: £5K will cost me £220 per year, with £5K into a savings account that will earn £206 per year, so I could only pay £14 interest on that £5K rather than £220.

I'm going to research the offset mortgages available and "do the math" just to confirm that a low fixed rate is better overall for me.

bunking_off

Tom

Your figures make sense. The issue I have is that to net anything like 4.4% a savings account would have to either be an ISA (which are capped hence not much good for stoozing large amounts), or be above 7.3% gross for me. The reg savers don't do it because they only allow a limited amount in, and in any case precipice down at the end of the year.

I guess that's a key point - the attractiveness or otherwise of offset/flexible/current account mortgages is very much driven by your tax status...they're far more attractive to 40% taxpayers than basic rate payers.

The other thing I used to benefit from was that I did a lot of overseas travel for work so had quite a big expense bill. Timing submission of expenses well meant I could get the claim in a good 4 weeks before the credit card bill needed paying....another few £k off the mortage.

On stoozing, I've ramped down a bit now, but peaked at approx £40k. That was about £180/month knocked off my interest payments. Great!!

My other big gain has been a company SAYE (savings related share purchase scheme). I was pretty positive that our shares were running at an alltime low, so I ploughed the max into the scheme, even though I knew it meant I probably couldn't notionally "pay" the mortgage (in One Account speak it just meant it went up instead of down). 3 years on, share price has trebled, so that's another couple of years knocked off the mortgage...

It isn't for everyone, but I just feel that without the flexibility of the OA I would never have got around to playing tricks like this. I don't think I could ever live with the strait jacket of a normal mortgage again.

tomstickland

I guess that's a key point - the attractiveness or otherwise of offset/flexible/current account mortgages is very much driven by your tax status...they're far more attractive to 40% taxpayers than basic rate payers.

This is an important point - I could become a higher rate tax payer this year or next year. Does the higher rate apply to all savings?

lotterywish

gwarren wrote:

Hi, has anyone got a one account for a mortgage?
or does anyone know any down falls to this type of mortgage any help would be appreciated
thanks

just to skip back to the first question, I think unless you have a decent amount in savings, ie. to offset, then you may be better to go with a lower interest rate, especially if you're looking to borrow 90-95%, the other thing to bear in mind is that because its essentially one big overdraft, unless you know where every penny is going, the internet banking side can be a little confusing to look at.
They only physically take out the interest from the account and just tell you to leave in extra, therefore discipline is required, otherwise you may be danger of spending more than you bring in, etc.

hope this helps

silvercar

If you don't want the confusion of linking your current account to an offset mortgage, but want the benefit of offsetting, there are offset mortgages available that are stand alone. You have your mortgage account and a linked savings account. The linked savings account pays no interest, instead you are not charged interest on your mortgage of the amount in the savings account (or you pay the standard interest amount and the extra is counted as a capital repayment). Coventry BS do a 2 year fixed rate.

Tassotti

bunking_off wrote:

On stoozing, I've ramped down a bit now, but peaked at approx £40k. That was about £180/month knocked off my interest payments. Great!!

Could you explain more about this "stoozing" you talk about. Can't quite get my head around it.

I have a One Account and wouldn't change it. I love the fact that all my income is saving me money on interest payments. I had a revaluation done and increased my facility. However, I did go and buy half of Eastern Europe :rotfl:

I find the staff and process of borrowing money so helpful and easy respectively. I even managed to get 100% finance to purchase a buy to let flat through them. No Hassles at all.

Tass

Joe_Bloggs

Stanmoresaver mentioned a lifetime tracker at no more than 0.5% over BBR.
The YBS do a full term BER + 0.45% offset mortgage. That is 4.95% at todays BER of 4.5% . The fees are a bit steep but you would only pay them once and not every two years.
@Mortgage brokers. Is their an explaination for the YBS's stance on not dealing with brokers. Am I overstating matters ?
J_B.

HelpWhereIcan

Joe_Bloggs wrote:

@Mortgage brokers. Is their an explaination for the YBS's stance on not dealing with brokers. Am I overstating matters ?
J_B.

The YBS dealt with brokers (for this read paid commission) until around 2002. They then decided that they would set up a 'dedicated intermediary channel' which is a lender called Accord (only available through brokers). In the beginning it offered essentially the same products but advisers dealt with a processing centre rather than the local branch.

In most cases. lenders have found that they have become increasingly dependant upon broker introduced business and most set up dedicated intermediary processing centres to ensure 'consistent service' and I believe this was YBS's solution to keeping both their own staff (who also have targets) and brokers (afterall we are important to most lenders) happy. Few say they will not deal with us, but some say they will not pay commission.

These days, the Accord product range is still similar to the YBS although there are differences and Accord has expanded to allow self certification and adverse credit. It could be argued that by using Accord, I can offer a YBS product that the branches can't. Which of the YBS lenders is offering the 'best' deals changes all the time and in most cases it is best to look at Accord and YBS as seperate lenders.

What you need to remember is that YBS do not say they will not deal with brokers, just that they will not pay commission unless it is for an Accord product. When sourcing for a client, YBS appears in my lists and, on the occassions when they come out 'top' I will offer the customer the opportunity to pay a fee and I will deal with the application or they can go direct and do all paperwork etc themselves.

If anyone believes that the YBS, Britannia etc are consumer champions because they do not deal with brokers, they should investigate the ownership of Accord (YBS), Platform (Britannia), Cahoot (Abbey) etc and they will find that most of them (with the possible exception of HSBC) have some form of broker arm and most of them have 'refused to rule out' paying commission to brokers in future. After all, this has happened with the Co-op bank and First Direct are 'dipping their toes into the broker mire' and I believe that there have been rumours that Cahoot and Egg plan to do the same to increase their market penetration.

BTW, if as a broker I were to set up a YBS agency for savings accounts etc I could do YBS mortgages and get paid commission. Looked into it a few months ago, but did not fancy the extra work that running a Building Society Agency would cause me, let alone the extra insurance!!

Hope this helps

HelpWhereIcan

Joe_Bloggs wrote:

Stanmoresaver mentioned a lifetime tracker at no more than 0.5% over BBR.
The YBS do a full term BER + 0.45% offset mortgage. That is 4.95% at todays BER of 4.5% .

There are quite a few lifetime trackers at less than 5% some have fees as high as £1500 and one I can think of that does not charge one. Which is best depends, as you know on the loan amount and the effect that the fees payable has on the actual cost you pay as well as whether or not you need features like offsetting, pre agreed facilities etc.

Joe_Bloggs wrote:

The fees are a bit steep but you would only pay them once and not every two years.

I have done a lifetime tracker myself on the basis that (amongst other things) I am not sure when I will be moving (depends on the wife - she has itchy feet) and needed one with no early repayment charges that would be competitive whether the wife decided to move this year or in 3 years!! (I cannot tell you how frustrating this was for me when saying to the wife 'how long are we happy to be tied in for' :rotfl: )

It is a little spurious to say that a good long term rate will always save your more that remortgaging regularly. However, the main advantage is that it is good protection against apathy and it also means that you never get to the position where you HAVE to remortgage unless you (or I ) can find something that is better.

Hope I have answered your questions.

bunking_off

Joe_Bloggs wrote:

Stanmoresaver mentioned a lifetime tracker at no more than 0.5% over BBR.
The YBS do a full term BER + 0.45% offset mortgage. That is 4.95% at todays BER of 4.5% . The fees are a bit steep but you would only pay them once and not every two years.

Unfortunately, bizarre though it sounds, I don't think I could live with the inflexibility of either an "offset" or "flexible" mortgage. Having used a One Account to the full, I could only live with a full current account mortgage. With that restriction, the market is suddenly a lot smaller.