Best mortgage with potential for overpaying? (Virgin One vs regular Flexi?!)

blizeH

Hi guys,

Probably best to give a brief bit of info to get an idea of what kind of mortgage I can get/am after. I've just bought a house with around 70% deposit and need a £65k mortgage to cover the rest. My main requirement is the facility to overpay without any fees (fingers crossed things will go plan, and I will actually be able to do this!)

I've just done a lot of research online as well as discussing deals with a broker a few days ago (who I decided not to use, due to his instance for me to take out varying insurance policies) and have narrowed it down to...

First Direct: 2.39% tracker interest rate (base rate plus 1.89%) with "Unlimited overpayments allowed without penalty." Valuation fee of £200. Set-up fee of £999.

Virgin One Account: 3.65% with no overpayment charges. No set-up fees, and seemingly nothing to try and catch you out.

Thinking perhaps I would be better off using a broker instead of relying on a bit of guesswork by myself, but from my brief experience of using just the one I've been very put off the entire thing.

Any opinions on the two above would be fantastic, thank you!

devildog

We have had the Virgin One Acct for coming up 4 years now. I wish that I had done it years ago. Took it out because we were told that our endowment would have a shortfall on paying off our mortgage and we didn't want to pay more in to it(endowment) or any of the other suggested options so opted for the One Account. Technically our mortgage and endowment have another 7 years to run, realistically it will be totally repaid next year:j
Our experience was that it was very easy to arrange (3 weeks from start to finish) and everything runs surprisingly smoothly(despite my concerns about online banking) Before we took it out we did look at other's experiences and I did read that some people hadn't managed to reduce their mortgage -as long as you are not one of those people that has to spend every penny available then I think you will be pleasantly surprised.

spence

Good morning Blize,

I can give you a little background about the one account as i've been with them since 2007.

1, It's no longer a Virgin product, it now belongs to RBS. (Have a look around this site for their convictions regards marketing promises, not good.)

2, The 3.65% you quote is a margin of 3.15% above BofE base. Up until 2008 it used to run at a margin of approx 1.1% with implied marketing that it would track BofE base rate. They've been very underhanded about this increase but I believe thats it for margin increases, but seriously RBS cannot be trusted!!

3, It's a good mortgage regards overpaying, I liken it to a giant overdraft facility as there's only one figure to look at, not (current account + savings)-mortgage.

Do the sums with regards how fast you'll overpay to see if the extra % of OA or the charges of FD are the cheapest.

4, If your going with the OA find a friend whos got one and get them to reccomend you and they'll give you and and your friend £125 aswell. If you've got no friends with a OA then you can PM me and I'll recommend you.

northerner999

Are these rates dependent on a good LTV?

I'm in a similar situation, I live and work in the Middle East and rent my flat out to a friend. I have £97K outstanding on a flat. I have no idea the value, Zoopla rates it around £140K - which is what I bought it for in December 2006 - but also lists identical flats alongside mine at upto £20K less!

I'm coming to the end of a high 6 per cent fix (I had to do something quickly as moving abroad and Halifax told me I needed it for consent to lend).

Now, however, I am preparing to move back to the UK in the summer to take up a job that pays very well. It's with the same company I work for now so wage is dependent on exchange rates (the weak pound has given me a substantial effective pay rise) but could comfortably overpay even as much as a couple of grand a month (I'm 27, no children or debt other than student loan) and don't want to be tied to a mortgage where I cannot overpay more than 10 per cent without penalty like I am now. I considered letting my fix roll onto Halifax's SVR but am sure I'd be able to find a better deal by looking around. I know everyone will say go to a broker, but I'm waiting until I move back in May as too much to sort out for the big move back first!

devildog

Spence, you are correct it is no longer Virgin but RBS (my apologies) and when the interest rate dropped(and kept dropping) they did not follow it all the way down but I still cannot complain.
The most difficult thing I initially found (as I keep my own paper record of transactions) is that when you withdraw money it needs to be added onto the balance and not deducted.Once you have got your head around that!!

Yes the LTV rates are different but not by a huge amount (cannot lay my hands on most recent paperwork ) but have found some from last year (Jun 08) and upto 50% was one rate,50-75% was .10% more,75-80% .20% more, 80-85%-.30%, 85-90% was .45% more,90-95% .60% and 95-99%- .85% more (when I say more I mean more than the ltv for 50%) so not a huge deal in it

blizeH

Awesome, thank you so much guys. The One account seems pretty awesome for many circumstances to be fair, particularly if you want to take some out for some house upgrades, new car or whatever, but I'm not sure I'd be in that position so make take the lower rate of the FD account.

Need to call them later and just confirm what the charges are if I want to switch mortgages, as well as confirming 100% that I can overpay as much as I like without charges.

Thanks again

Thrugelmir

blizeH wrote: »

Awesome, thank you so much guys. The One account seems pretty awesome for many circumstances to be fair, particularly if you want to take some out for some house upgrades, new car or whatever, but I'm not sure I'd be in that position so make take the lower rate of the FD account.

Thats precisely what they want you to do!

If you want to clear the mortgage quickly don't fall into the trap........

getmore4less

The OneAccount is not the best offseting product.
Loads of people have had problems with it.

Other offset products will do the same job better. there is nothing the one account offers that is special.

First direct offset product is cheaoer to run after setup with the fee based
they have no fee option +2.39%


Barclays allow ISAs to be offset

...there are others.

blizeH

Huge thanks guys! Sounds like the FD is the one for me then