Help with remorgage and one account

Drobbin

Hi all

We are having to remortgage to pay off debts - quite significant ones - we are in a fixed rate with Nationwide at 5,66% which runs out in 3 years - if we remortgage to Abbey to clear our debts etc we would be £450 per month better off - i know we will have £2000 fee to pay to come out but it still sounds better to us and have had advice from IFA who agrees better to switch - the only thing is have started to look at "The One Account" has anyone ever gone with these - where its all in one account? we have approx £4000 savings , will have approx 200-400 left each month - tried out their mortgage shrinker and we could repay the mortgage in 12 years rahter than 20 and save about £65000 in interest - it sounds too good to be true but dont want to miss an opportunity if it could work
what are your thoughts - anyone had one?
thanks

isplumm

Hi,

I haven't had a Virgin One account, but one thing I would be careful of is that it works by you putting all your money into the account, so reducing your debt quicker - which is why you pay less interest.

That is fine, but obviously you then have a credit limit, which could be quite high & you might then be tempted to buy something expensive on it - which means you don't actually pay the mortgage back - so as long as you can control your self, then I think these are excellent.

Mark

happybroker

these accounts and other "flexible" mortgages are great if you have cash floating around and are carefull with money.

I guess from the content of your op that you are now taking hold of your finances which is great but also that given you are trying to save money each month to repay debt that you don't have masses of spare cash which could call into question how appropriate an offset or current account mortgage is for you.

Might be an idea to speak to a whole of market broker who can advise you after looking in detail at your circumstances....my feeling (based on the fairly limited info supplied) is that you may want to look at achieving the lowest possible rate now to free up sufficient cash to repay your debts and when this is done look at a more flexible mortgage which you can then overpay to get rid of the mortgage more quickly.

Good luck with it

Drobbin

Thank you both so much for those replies very helpful

waveneygnome

I've had a One Account since 1998 and love the flexibility it gives me, and the service levels I have recieved are excellent.

Only point to make is that their interest rate is variable (and not as we all assumed at the time of taking the mortgage out, a base rate tracker). I.E. it is up to their discretion how much interest to charge you. For 10 years that always used to track about 1.1% above the base rate. Now they are 3.15% above base rate......................so IF they kept the same margin, if/when the base rate moved up to say 5%....then customers COULD end up paying 8.15% interest!

If you are trying to budget and get your finances back to an even keel, why not consider a fixed rate morgage and make overpayments each month. Most lenders will now allow you to fix and make overpayments of up to 10% of the loan without penalty per year. This way, you will still 'shrink' your mortgage, but have the confidence to rely on your budget.

Another alternative is with First Direct. They offer a fixed rate with offset facilities. Not sure what there rates are at the momemt. Fixed rates have been moving up in the past 2 weeks.

Kind regards
WG

Drobbin

WG - that's a very good point - I think overpaying on a fixed rate would be the best - it scares me to think of the interest rates going up - which inevitably they will and I didnt realise it wasnt like a tracker - that makes a big difference to our decision - thanks