the one account

spencer69

is the one account eny good and how does it work

wymondham

We are in the process of applying for this - it's rate is higher than normal, but the flexibility is unbeatable. It does not suit everyone as you need to have a fair amount of savings in relation to the mortgage. Basically your mortgage account is one big overdraft, with your account in debit to the sum of your mortgage amount. Any savings put in, or wages put in etc pay off the mortgage to that sum, but the beauty is you can take it out again if you have to up to your limit (although obviously best not to if you can help it to make the account effective). I like it because you automatically overpay your mortgage to the max each month (all spare cash, not just set £50 etc..) - you don't need to do anything to do this. One Account take the interest monthly, but don't take any capital part (assuming you have a repayment mortgage) - they just tell you how much you should leave in the account (this is also flexible in you can leave more/less and nobody gets upset, but you need to keep a close eye on your plan and they do review it with you on occasions!) - the only stipulation is you have it all paid by the end of your term ... how flexible is that!

You have to be disciplined as you can get your hands on lots of cash and mess up your repayments etc, but if you're sensible it is a good product.
I think all the above is true and correct, but anyone feel free to correct me!!!

I've been looking at this product for months, getting my head around the radically different approach - many discussions with them later and we are applying (excellent customer service as well!!). No high charges to setup either which is nice. Good account for people with variable incomes as you have no set mortgage payment as such (pay little this month, more next etc..)

nrsql

>> I've been looking at this product for months, getting my head around the radically different approach

You might want to look at other similar products. This isn't new it's been around for a long time.

You also might want to check how much you would save taking into consideration that you should have an on-line saver account to go with your current account. Compare with flexible and discount products.
I would be really surprised if this came out as a good product - although the principle sounds good.

The Virgin One is 6.45%
Also have a look at the
first direct 10 year fixed offset at 5.49%.
IF do an offset at 5.59%

If you want an offset then these might save money. I would be really surprised if the Virgin product worked out better than a decent non-offset mortgage for anyone.

i_love_it

I've had a mortgage trust offset account for 3 years, at the time it was better than virgins but i haven't kept on top to see if it still is.

It works for me. Basically you can keep savings in the account that are instantly accessible, should the need arise and while they are there they are earning interest at the rate of mortgage borrowing as opposed to saving (rates are always higher for borrowing than saving) They are also tax free, if you pay taxes, the only way to have tax free savings is ISA but amounts are limited to 3000 per year

So, 10k savings in a savings account will earn x amount of interest and then you pay tax. In an offset account 10k savings will reduce your mortgage repayment by xx, more than you could earn in interest and not liable for tax.

And, you could withdraw that cash at any time should you need to.

Also, when your salary is paid, lets say 2000, if your bills go out at end of month, throughout the month that cash reduces you loan on mortgage offseting repayment due.

It makes your cash work harder.

You have to be very disciplined and statements are complex to say the least.

If you have a mortgage for 100000 and 10000 savings then 2000 salary with 1400 outgoings at the time of statement, you balance would show your account as being minus 90400, its a bit scary and you have to keep on top of whats real to spend.....

Jeez, does that make any sense?

nrsql

>> In an offset account 10k savings will reduce your mortgage repayment by xx, more than you could earn in interest and not liable for tax.

But you need to offset that against the extra interest you are paying for the offset mortgage. There will be a break even point which will depend on the rates you are comparing. I've 20k suggested as a figure (i.e. less than that isn't worth an offset) - that's probably for the Virgin sort of rate.
For me for that sort of figure I could (and did) keep in a flexible mortgage rather than offset as I could cope with the few days it takes to get it out if needed.

I went through all the figures several years ago (ok things are a bit different now but Virgin is still very expensive) and couldn't find any way that the offset would benefit me (I wanted it to as I liked the idea).
What I did was compared how much I would need to keep on average in a current account to break even on the offset compared with a cheaper mortgage.
Did the same calculation with an e-saver.
Did the same calculation with a high interest account.

I suspect a true comparison would be with the e-saver as the wasted money in the current account would hopefully be cancelled out by the high interest.

Then I considered whether on average I would have that much money floating about (i.e. couldn't be used better elsewhere).

In the end I decided I wouldn't and went for the cheaper flexible mortgage.
I paid it off eventually but it was surprising how little I overpaid the mortgage as I often found more profitable things to do with the money. I would have been better off with the cheapest mortgage rather than the flexibility.

The cheap offsets weren't available then though (Virgin still wasn't the cheapest though).
Now I might well go for one of the offsets I mentioned above - but not Virgin. Try doing a similar calculation and see how it suits your lifestyle - how much time you are willing to spend moving money around is important. I look at my current account daily so can keep most in the e-saver - and also have a large overdraft facility so it doesn't cost me much if I get it wrong.

i_love_it

The great thing about offset is its a good all rounder for people without structured finance, my earnings vary massively, a good three month will fund a bad 3 months. My savings need to be accessible easily, I'll pay a chunk off with a windfall, i could borrow easily at mortgage rate should the need arise.

I definately couldn't forcast my finances for a period of time. So, it works for me, but is not for everyone

watcherman

I prefer the First Direct product, does the same thing as One Account, but your accounts are shown separately, not as one big lump of debt. I find it easier to manage in that way.

They are also fixing for 10yrs at the moment at 5.49%, I have started a thread to see what people's thoughts are on doing that.

madhouseof4

We have had a One Account for 4 years now and it has been invaluable to us. My husband's job has quite variable pay due to being on commission so with a normal current account / overdraft / mortgage combination we could easily have incurred lots of charges and gotten into difficulty.

We find it helps smooth everything out - so when we had a really bad year financially due to unforseen circumstances ( husbands job went downhill and I had to quit work to become a carer- hence joining the site ) last year we had the equity to fall back on. Now my Husband has a decent job again we are back on track but he's still paid on commission so pay can vary by up to £600 a month.

I agree it's not for everyone but in our circumstances it suits us really well. We have super-balanced-transferred 8k onto interest free cards to save some interest and that amount is gradually going down - now 5.5k shrinking. You need to be disciplined as it's easy to fritter away your equity if you are that type so I wouldn't recommend it to everyone, but we never pay any bank charges and have alot of flexibility.

pusscat

Me and Mr Puss have a Woolwich Openplan (same idea) mortgage.

Works for us as we run our own company - we don't take regular salaries, but usually take dividend share income once or twice a year. We can offset our tax fund, our VAT fund and any profits, and then always have the cash handy when they need paying. We don't earn any interest so it simplifies the tax position and reduces our bill.

Only drawback is the rates are a bit higher than I could get without an offset, but as our mortgage will (hopefully!) be paid off in 6 months there is little point changing now. We have a tracker (0.85 abover base rate) which is currently at 6.1%, but over the last few years it has been more like 5.5% so it has been pretty good to us. We also use the "offset" to reduce the term, not the monthly payments.

We are looking to buy some land to build on, so keeping the offset also gives us instant, approved access to a large ammount of cash if the right piece of land comes up.

You need to be disciplined as if you are the kind of person who has a "blow out" then you can do serious damage to your mortgage balance!

We use a 0% cashback credit card for all our monthly spends, this leaves as much cash in the account as possible for as long as possible. All d/d's are set to go out as late as possible again maximising the cash in the account.

If you have no/small savings then this is probably not the best way to do things, you are better off with a lower rate and using an ISA to save tax free, but it works in some cases.

I would love to be brave enough to "stooze" some 0% credit cards on to itt, but I am still working up to that!

Puss