The One Account, but is it the one?

dave_wolves

Just wanted to know what peoples views are of the One Account, or if there are any positive personal experiences of it? We're seriously looking at it and on the surface (after entering our personal financial situation) looks pretty....exciting?! It seems that we can cut our current mortgage term down from 20 years to 12 but would love some confirmation. The rate seems a lot more reasonable than it was 4 or 5 years ago when it was heavily marketed (3.75% reduced from 5.75%!) but before stepping into the breach wanted to know what it was ACTUALLY like behind all the good marketing......Cheers Dave :beer:

HappyMJ

The mortgage calculator on the one account website paints a picture which is inaccurate. The mortgage rate is 3.75% but what rate would you get elsewhere? Would you really leave an extra £XXX per month in the account? You will have a 12 year mortgage without the help of the one account just by following what you put into the calculator.

If you tell me the figures that you used I'll tell you what in reality is better. If you find a standard mortgage at the same variable rate as that of the one account and pay in salary at the beginning and spend evenly over the month you will save 1 month on a normal 25 year term but if you find a mortgage at 3.5% that allows overpayments then you will save more than the one account.

I have a one account and I do like it but it works for very few people. It works for me as I have an extremely variable income. I have constant payment holidays when not working and also pay large overpayments when I am working. I don't have to ask to do this it just happens so a normal mortgage would not suit me.

getmore4less

BARGE POLE required

The offerings by the other offset lenders are better.

Just stick the total surplus you have including your monthly payment into any mortgage calculator and it will tell you the term of the mortgage.

the current account bit saves a tiny amount it is the saving(overpayments) that make the difference.

LilacPixie

I quite liked the look of the FD base rate tracker offset with no ERC's but we couldn't meet the LTV requirments this time around.

One account I personally don't like, I feel the rates can be met better elsewhere.

SmlSave

Hi Dave

I've got two friends who love the One Account and it works very well for them.

I'm sure I remember reading that it's generally only worth having the One Account if you have at least 10% of your property value in savings other wise it just doesn't add up.

Pinklepurr

I've had a One Account in the past but reverted back to a regular repayment mortgage after about 3 years of having it. Unless you are VERY disciplined with your outgoings there is a real danger that you will borrow up to your maximum "facility" At the time, we weren't very disciplined and with the expense of a young family we found we weren't reducing the overall debt. If I recall correctly, we also put all our savings (about 5k at the time) into it but I quickly became worried about having all our eggs in one basket .

If however, you have large surplus at the end of each month or an annual bonus for example, then I guess it would seem attractive.

dave_wolves

Thanks all.......

HappyMJ, the figures I used were:

House value 190k
Borrowing 108k over 20 years
3200 paid in every month
Left with 500 each month
No bonuses
No % increases
No lump sums

What always gets me is the arrangement fee which can instantly add £500 to £1,000 to your borrowing. I believe the One Account don't charge this....

Appreciate your help.....

SmlSave, in what way was it good for your friends, if you don't mind me asking?

LilacPixie

Dave first direct arrangment fees are currently 0 or 99 on alot of products. Are you out of your fixed rate at the moment, if so how much is your interest rate?

HappyMJ

dave_wolves wrote: »

Thanks all.......

HappyMJ, the figures I used were:

House value 190k
Borrowing 108k over 20 years
3200 paid in every month
Left with 500 each month
No bonuses
No % increases
No lump sums

What always gets me is the arrangement fee which can instantly add £500 to £1,000 to your borrowing. I believe the One Account don't charge this....

Appreciate your help.....

SmlSave, in what way was it good for your friends, if you don't mind me asking?

It's the £500 overpayment that is reducing the time of the mortgage.

A standard 20 year repayment mortgage at 3.75% will cost £640 per month.

If you paid the £640 plus the £500 that is left in the account to a normal mortgage you would be making £6,000 of overpayments every year that's equal to about 9.375 extra payments for every year you do that so if you overpay for 11 years 11 times 9.375 = 103 extra payments divide that by 12 = 8.6 years which means you'll pay it off in 11.4 years.

You don't need a one account to do that. Just get a normal mortgage over 12 years and the payment will be set to £932 per month at 3.75%. You will still have £208 per month left over to make ad-hoc overpayments or to save in a savings account for bigger purchases such as a car every few years.

If you set the term to 10 years the payment is £1080 per month which is very close to your payment of £1140 per month.

The one account has fees but they charge everything seperately. A scaled valuation fee, solicitor fees, bank fees and a few others I can't remember them all...land registry was one...

dave_wolves

LilacPixie, we are currently fixed on 4.21% with Halifax which runs for another 16 months or so. I know it seems early to be thinking of moving, taking into account the early repayment penalty, but just trying to get my head round everything.......plus we're in saving mode and looking at everything - gas/elec/mobiles etc......got another child on the way so every little helps!!

dave_wolves

HappyMJ wrote: »

It's the £500 overpayment that is reducing the time of the mortgage.

A standard 20 year repayment mortgage at 3.75% will cost £640 per month.

If you paid the £640 plus the £500 that is left in the account to a normal mortgage you would be making £6,000 of overpayments every year that's equal to about 9.375 extra payments for every year you do that so if you overpay for 11 years 11 times 9.375 = 103 extra payments divide that by 12 = 8.6 years which means you'll pay it off in 11.4 years.

You don't need a one account to do that. Just get a normal mortgage over 12 years and the payment will be set to £932 per month at 3.75%. You will still have £208 per month left over to make ad-hoc overpayments or to save in a savings account for bigger purchases such as a car every few years.

If you set the term to 10 years the payment is £1080 per month which is very close to your payment of £1140 per month.

The one account has fees but they charge everything seperately. A scaled valuation fee, solicitor fees, bank fees and a few others I can't remember them all...land registry was one...

HappyMJ

Thank you very much for the detailed breakdown, but the one thing I like about the One Account is that if I make an overpayment and things go wrong on a personal level i.e. redundancy etc....then I can withdraw the overpayment whereas if I commit to reducing the term with a "normal" mortgage then I'm locked in paying that amount of money each month. Of course I can take payment holidays but won't the debt accrue at a faster rate on a shorter term mortgage for doing this?