"THE ONE ACCOUNT" any advice/experiences?????

skim

jamesd wrote:

The other accounts also let you offset savings, but you only pay 5% interest on the 60000 that isn't offset.

Best case then for the One Account Current Account Mortgage is a facility of up to 50% (property value 240000) at an interest rate of 5.85%. On the 60000 not being offset that's 3510 in interest.

For those two at 5% the interest on the same non-offset 60000 is 3000.

Say you make 5000 a month in salary and have 1000 a month that you move to savings, the rest is spent at an even rate during the month so you have an average of 2000 in salary in the account at any time. That saves you 5.85% on 2000 or 117 a year.

Net result: at 50% LTV the One Account is costing you 393 a year more.

But that's the best case for the One Account interest. Here are the other cases:

under 50% LTV: 5.85% 393 a year worse off
50.01-75% LTV: 5.95% 451 a year worse off
75.01-80% LTV: 6.05% 509 a year worse off
80.01-85% LTV: 6.15% 567 a year worse off
85.01-90% LTV: 6.30% 654 a year worse off
90.01-95% LTV: 6.45% 741 a year worse off
95.01-99% LTV: 6.70% 886 a year worse off

It doesn't stop there, though. The best cash ISA around is paying 5.75%. Since the other mortgages only charge 5% interest you can put 6000 a year (assuming you're married) into the cash ISA and gain an extra 0.75% on the money over the One Account. It's only 45 in the first year but that rises to 225 more after 5 years (30000 in the ISAs) and 445 after 10 years. The others are so cheap that if you have cash ISA available it doesn't even pay to offset. The One Account is so expensive that you can't beat it with savings.



Assuming no cash ISA allowance left, anyway. I hope someone with 60000 in an offset account is putting all 7000 or 14000 for a couple a year in equities and doens't really have cash ISA available.

Re- the ISA, I'm looking at having the mortgage paid off within less than 5 years.
The thing about investments is that you can not guarantee the return - I'm a low risk investment type of person so I think the oneaccount would suit the way I work.

The way I calculated out my mortgage is first of all put into the oneaccount calculator all my figures & it came out saying that I would pay it off within 4 years. I then went to try the cheapest mortgage I could find & entered the same length of term & calculated the total to pay. I then went back to the oneaccount & did the same length of term there & there was very little in it in the amount you pay back overall over that sort of term for that amount of loan.

The oneaccount, I agree is not the cheapest but offers a large amount of flexibility & they calculate your repayment on the difference between the mortgage & savings whereas most other offset work just towards reducing the length of term of the mortgage & you'd be paying double on a 120k mortgage with 60k savings (you repayment is fixed at repaying 120k rather than 60k)

bunking_off

There's been quite a few threads in the past about the One Account. See;

http://forums.moneysavingexpert.com/showthread.html?t=266948

http://forums.moneysavingexpert.com/showthread.html?t=265840

http://forums.moneysavingexpert.com/showthread.html?t=220391

http://forums.moneysavingexpert.com/showthread.html?t=163153

http://forums.moneysavingexpert.com/showthread.html?t=159293

http://forums.moneysavingexpert.com/showthread.html?t=119120

Those who have them and exploit the facilities love the One Account. People who use them as a conventional mortgage don't tend to benefit.

You do need to be disciplined, but I wouldn't say "extremely disciplined". It's possible to pay less overall by having the best mortgage deal in combination with the best ISA, but in that situation you do have to be extremely disciplined to sweep any excess funds into/out of your ISA.

The other thing about the One Account, discussed in one of the above threads, is that it changes your outlook on life : your mortgage is no longer just one of those things you pay every month, it becomes a bloody great overdraft which you want to get out of your life asap.

Proof of the pudding is in the eating...my 25 yr One Account mortgage should be paid off in just under 10 years (3 years to go), assuming we don't get a bigger place.

urbanmac

One account has been great for us, we are rapidly paying off our mortgage with very little effort. As others we spend as much as possible on credit cards throughout the month and then pay it back in FULL when the bill arrives. This way our money stays in the account and is offsetting our mortgage everyday.

It does help if you have a lump sump or savings that you can put keep in your one account.

For us it has been great, customer service is excellen (I once complained and they sent me a case of red wine as an apology!) and the online account is pretty good as well.

nrsql

I would say this sort of account would benefit very few people that are willing to spend a bit of time looking after their finances.

Compare it to a flexible mortgage at a lower rate which you can put lump sums in together with an i saver account.
Also compare with the lowest rate you can get together with an i saver account.
Pay money you save as a lump sum when it reaches the threshold.

Might help if you only leave money in a current account - but no one on this site would do that would they?

Rick62

I think offset accounts can be very good, however in my experience the OneAccount rarely offers good value. It is popular because it is promoted so heavily.

Other lenders with good Offset schemes worth looking at include Intelligent Finance and Standard Life. There are also mortgages which are not offset but with great flexibility, like many of Alliance & Leicester (but not all) mortgages allow you to overpay and then underpay without penalty.

Maid_of_Kent_3

I love the One Account. I have had mine for more than seven years and it has been useful through good times and bad because of the flexibility.

The website is excellent as is their telephone customer services. On one occasion when another bank's cash machine didn't give me the full amount I was due, I rang them straight away. It was 8pm on a Sunday evening. The guy I spoke to said he couldn't check until after midnight but he was back on duty at midday on Sunday so would call me. At 12.20pm he called me to tell me that it seemed like I had been charged for the missing money. On Monday he left another message to say I would be refunded.
Oh, and their call centre is in the UK

teabelly

They're useless with paperwork though. Every item I sent them to change to them was lost the first time. They are currently screwing up the direct debit transfer. I told them i wanted to transfer them when I joined. I returned the form, again they claim they didn't receive it but only after I prodded them after a month of wondering why my direct debits were still on my old account. They have just sent me a tick list of all the dds to transfer and a confirmation of whose going to transfer all in the same day. Clearly they have some serious problems! I transferred at the end of august and I still don't have my DDs transferred because they have taken so long. Not impressed. It took 2 goes to enable the visa card too. First time I used it was refused even though I had enabled it.

Other than that it is blooming brilliant and I wouldn't go back to an ordinary account. Each month I can see how much interest I am paying on the mortgage which I never could grasp with an ordinary mortgage. It is much more motivating thinking of the mortgage as one large figure rather than just £200 a month or whatever. The higher interest costs are worth it for the flexiblity and the options it gives you in life.

tawnyowls

bunking_off wrote:

Those who have them and exploit the facilities love the One Account. People who use them as a conventional mortgage don't tend to benefit.

Absolutely, and that's the key. If you treat it as a normal mortgage and expect to pay off in the same term, then you'll lose out, obviously. If you take it as another lightbulb moment and use the statements to remind yourself every month just how much you really are in debt and resolve to pay it off asap, and get the rate changed every time you reach the next level of LTV, then you'll win out in the end. When you see the amount you reduce each month, it really does encourage you not to spend.

jamesd's calculations fit in very well with what I worked out when I changed over, and I'm willing to sacrifice £450 a year (which is less than an extra month's interest payment for me) for a few years knowing that I'm on track to pay off at least 4 years early (on a 10-year mortgage) and so end up saving far more in interest than I lose out on.

jamesd

tawnyowls, that 450 a year you're sacrificing is 450 a year that isn't being used to pay off the mortgage.

You can do exactly the same pay it off as fast as you can routine with other current account mortgages, offset mortgages and flexible mortgages.

The lightbulb moment here is realising that you're throwing money away in interest if you have a One Account mortgage, because you can do it more cheaply elsewhere.

phead

bunking_off wrote:

The other thing about the One Account, discussed in one of the above threads, is that it changes your outlook on life : your mortgage is no longer just one of those things you pay every month, it becomes a bloody great overdraft which you want to get out of your life asap.

Very true, although I've looked at other offset accounts I cannot find one where everything lives in the same pot. A large negative numbers rarther makes the mind focus on paying it off.