Virgin One Accounts - any experience of them?

melt71

I've just taken out a mortgage and for various reasons I didn't have a lot of choice about the product; I've had to go with a self cert mortgage which is interest only. The mortgage I have is £108000.

I want to change it as soon as the fixed rate ends in March 08 and I am therefore trying to research what will be the best option for me. In the meantime, my boyfriend is planning to move in with me and then we will do up this house and probably move to a 3 bed in 2008.

Does anybody have any experience of Virgin One Accounts (or any other types of One Accounts).

My details are;

House Worth £160,000
Mortgage £108,000
Savings £10000 (by March 2008)

I will be living with my partner then and our monthly income left over after all bills but NOT including mortgage will be approx £1900 each month, we intend to leave at least £800 in the account each month on top of the actual mortgage costs.

My partner currently has credit card debt which will be fully paid off by March 2008. I don't have any debt at all.

Therefore, according to the Virgin demo, we would be much better off with this type of mortgage, but don't want to take their word for it!

Any advice/words of wisdom?

Thanks

dang

Hi melt71,

If you are not looking to change for 2 years,i would do the research then - the market will be a whole different place by then.

However i did have a Virgin one account,and i did find it useful,but you dont get the best rate and if you dont need access to the extra £800 a mounth,i think you will get a far better deal getting a mortgage that will allow overpayments.

I left Virgin one around 18mths ago,and have saved quite alot by getting a cheaper rate,even though my savings are not now offset.

Regards Dan.

silvercar

Offset accounts can be great if you are regimented enough to use them properly.

The downside is that the interest rate is not the best around, the upside is that you effectively get interest on all your spare money and savings at your mortgage rate.

Read the sticky thread on offset mortgages (with a large coffee) for the nitty gritty, but it has been calculated that to benefit, on a strict numbers basis, you need to have or expect to have at least 30% of your mortgage amount in savings.

I like the knowledge that I can make every last penny work to offset the mortgage in the knowledge that I can get the money out again when I want to.

melt71

The downside is that the interest rate is not the best around, the upside is that you effectively get interest on all your spare money and savings at your mortgage rate.

I haven't been able to get the best rate anyway as it's a self cert mortgage, and when the fixed rate ends it will be over 6%! That may change when I take on a joint mortgage with my bf as we will have double the income and won't need a self cert mortgage.

I like the knowledge that I can make every last penny work to offset the mortgage in the knowledge that I can get the money out again when I want to.

That's my thoughts exactly. All of our spare cash I want to be able to reduce the mortgage interest, but we will need the flexibility of being able to withdraw it if we need to.

dang

Just an idea,but have you thought about paying your spare cash into an isa?
Im doing that now - my mortage is on a fixed rate 5.25% with the derbyshire,but im saving my cash(and my partners) in a Abbey isa getting 5.3% this year.I know the deals will change and i may have to move the cash around,but offsetting is not always the best way to save your cash - it is good however if you need regular access to the cash.

melt71

dang wrote:

Just an idea,but have you thought about paying your spare cash into an isa?
Im doing that now - my mortage is on a fixed rate 5.25% with the derbyshire,but im saving my cash(and my partners) in a Abbey isa getting 5.3% this year.I know the deals will change and i may have to move the cash around,but offsetting is not always the best way to save your cash - it is good however if you need regular access to the cash.

Yes, I'm doing this now. However, in two years when we possibly buy a bigger house I want to start reducing the mortgage as much as possible. At the moment is £500 a month and that's interest only, so I don't want to have lots of savings scattered in ISA's and yet be paying tons of interest on a mortgage. It doesn't seem to make sense. On this mortgage I can make small overpayments once a year, but is it even worth it when it's a interest only one and I'm going to change as soon as I can?

dang

"On this mortgage I can make small overpayments once a year, but is it even worth it when it's a interest only one and I'm going to change as soon as I can?"

If the rate you are paying on your mortgage is greater than the after tax rate of your savings,it is well worth overpaying - as long as you dont get charged for doing so.