The Oneaccount

FrankieM

Hi everyone,
Tried this question on the mortgage board, but have had no responses, so I thought I'd give you guys a try...;)

Anyway, I have opened a oneaccount and I'm looking for some advice on when I should my direct debit payments for.
My husband gets paid on the 2nd last day of every month and I know the idea is to keep as much money in the account for as long as possible.
For the life of me I can't figure out how when that would be.
Also interest gets charged on or around the 13th of the month. I don't knoe what difference that makes either!

Any advice would greatly appreciated
Thanks

pusscat

I have a Woolwich offset mortgage and the same thing applies. Basically, you want to keep the maximum amount of money in the account for as long as possible - so in your case from the 28th (ish) right through to the 27th of next month.

If you look at the dates your OH gets paid (usually around the 28th or so I guess?) then try to set up the dd's for a couple of days before that - say the 26th. Some companies let you choose a day, others only let you pick from their selction.

If the one account is like the other offsets then interest is charged daily (i.e. they work out how much you owe on each day of the month, work out the interest for each day and then add it up for the month) so it should not make any difference which day it is charged on.

That is the way I have always worked it anyway, happy to stand corrected if I am wrong

Puss

I know this seems a bit back to front, dd's going out just before you get paid, but it is actually just before you get paid next month, rather than this - IYSWIM!!

bunking_off

Pusscat is correct on all counts.

jamesd

FrankieM, pusscat is right. I'm sorry to hear that you've started a mortgage that will make it take longer and cost more to pay off your mortgage, though. Good luck with it anyway!

FabDee

Hi all

I have the one account since March 2006, on my monthly statement it said the best way to get the best out of the account is to set up your D/D's to come off a day or 2 2 b efore the interest is taken out, mine is the 15th of the month, so I have changed as many as I can to the 13th. It seems to work as I am now well ahead of my target.

Hope this helps.

h4nym

FabDee wrote:

Hi all

I have the one account since March 2006, on my monthly statement it said the best way to get the best out of the account is to set up your D/D's to come off a day or 2 2 b efore the interest is taken out, mine is the 15th of the month, so I have changed as many as I can to the 13th. It seems to work as I am now well ahead of my target.

Hope this helps.

Hiya Fabdee

I'm not sure I understand that... surely it all depends on when you get paid!

Let's take a scenario where you have your DDs on the 13th, Interest on the 15th, and your salary goes in on, say, the 25th.

you take your direct debits out - increasing the overdraft - and then the interest gets debited - further increasing the overdraft. Then you wait 10 days to get paid. So for those 10 days (a third of a month in this example!), you're paying interest on a bigger amount.

If you were to move your direct debits to, say, the 23rd then you'd still take the interest hit on the 15th, but then you wouldn't go any deeper until the 23rd, which then gets replenished on the 25th.

The best thing you can do now is arrange for your pay (if you can!) to go in on the 16th of every month! Failing that, then move your direct debits to a couple of days before you get paid.

All the best

H

Monkeymia

jamesd wrote:

FrankieM, pusscat is right. I'm sorry to hear that you've started a mortgage that will make it take longer and cost more to pay off your mortgage, though. Good luck with it anyway!

Okay I'm new on here so be gentle...

I have a NatWest One a/c based on the OneAccount as RBS owns NatWest now. I've been allowed to make over payments and I'm almost at the lowest interest tier. So will be owing 50% of what house is worth - this new interest rate will be 6.35% with no restrictions on overpayments.

BoE base rate is 5.25% so my mortgage rate is 1.1% above that.

Is there a better mortgage I should be on (bearing in mind costs incurred to change)?
For info - RBS's mortgage shrinker application states I should pay off my mortgage in 7 years.
Any help greatly appreciated.

jamesd

Monkeymia, please work through this example using your own figures and post them and the results. It should make the situation pretty clear. The 5.2% Newbury rate probably hasn't been updated to reflect the recent rate change yet, so I suggest you use 5.45% as its rate even though the web site still says 5.2.

The One Account can be an excellent choice if you have a very high percentage of your total mortgage going into and out of the mortgage account within the same month. Putting it in and mostly leaving it there for many months or years causes other mortgages to be better.

A lifetime tracker or offset mortgage with lifetime interest rate tracking will probably be cheaper for you.

You might also consider the Intelligent Finance mortgage that allows you to offset cash ISA savings, since that will let you accumulate a large cash ISA fund with tax benefits that outlast the mortgage. New rules in April are likely to let you transfer from cash to stocks and shares, so once the mortgage is fully offset you could start to switch the ISA money into stocks and shares ISA investments where it can become part of your retirement income planning.

Monkeymia

Wow thanks jamesd - loads of info there (in your post and the thread that it comes from), will take me a while to digest it all.

Kind regards,
MM

EDIT:
Egg Flexible Mortgage - The overall cost for comparison is 5.9% APR.
NatWest One Mortgage - (0%-50%) 6.6% APR, (50.01%-75%) 6.7% APR.

jamesd

The Egg Flexible Mortgage is a lifetime tracker at BoE+0.75% so it is a fair comparison (and it offers overpayment and withdrawing of overpayments) but there are better deals available.

The Newbury mortgage doesn't allow withdrawing of overpayments but has a lower interest rate. Keeping the money in a savings account and having a lower mortgage interest rate can (often is) cheaper than a higher rate offset or more flexible mortgage.

Remember not to use the APRs in the comparison - use the mortgage interest rates and add any fees to the amount borrowed. The One Account calculator will normally automatically reduce the interest rate as the LTV falls to lower interest rate steps, unless you set a fixed loan facility amount.

dzdoris

I'm confused

I have a one account. I'm not really that clued up about mortgages an all that. I thought the one account is a great choice?

Originally Posted by jamesd
FrankieM, pusscat is right. I'm sorry to hear that you've started a mortgage that will make it take longer and cost more to pay off your mortgage, though. Good luck with it anyway!

Why did you say that jamesd?

Thanks