Is the oneaccount mortgage shrinker 2g2btrue?

liljack

i have recently taken out a mortgage with abbey, and with the recent interest rises, the monthly payments have increased more than i can comfortably afford.l tried out the online mortgage shrinker tool with oneaccount,advertised on tv, and it seemed as though it would save me a lot of money, reducing my total repayment by 15 years!what i want to know is, is this too good to be true?what are the drawbacks?there must be a hidden charge somewhere?

toonfish

surely the monthly repayments would be much higher though?

Dani85

Yeah, if your repayment term is shrinking then the monthly installments would surely be higher???

nibs

liljack wrote: »

i have recently taken out a mortgage with abbey, and with the recent interest rises, the monthly payments have increased more than i can comfortably afford.l tried out the online mortgage shrinker tool with oneaccount,advertised on tv, and it seemed as though it would save me a lot of money, reducing my total repayment by 15 years!what i want to know is, is this too good to be true?what are the drawbacks?there must be a hidden charge somewhere?

as far as i can work out, the difference is that you pay a slightly higher interest rate on the loan, but if you have plenty of money left over each month then that is saving you interest.

gaetss

We are in the process of renewing our mortgage and we looked at the one account. I keep a record of our outgoings and plugged it in a spreadsheet and looked the difference with a standard mortgage.
For us it did not worth it since the money we have in the saving account is zero (could not find the a one account which take the ISA into consideration). Compare to a normal mortgage we ended up slightly higher (few hundred pounds after 2 years).

As I understand it the one account is good for people who earn reasonnable money and have savings. But the rate is so high that carefull consideration must be made before taking this mortgage.

Why not look at the offset mortgage (roughly same features but lower interest rate)?

Rick62

The assumptions the OneAccount calculator uses are misleading nonsense. Of course if you overpay by several hundred pounds a month you will knock years off your mortgage, whichever lender it is with.

The OneAccount rate is higher than most mainstream rates (usually by about 1%), so you need a lot of savings being offset. And if you have several providers have offset accounts that are much better value.

toonfish

Rick62 wrote: »

The assumptions the OneAccount calculator uses are misleading nonsense. Of course if you overpay by several hundred pounds a month you will knock years off your mortgage, whichever lender it is with.

The OneAccount rate is higher than most mainstream rates (usually by about 1%), so you need a lot of savings being offset. And if you have several providers have offset accounts that are much better value.

You are spot on there - it's a big marketing gimmick in my opinion, and people go for it in their droves.

apk1

Gaetss,

For your information Woolwich will allow cash ISA's to be offset, and I suspect others will too, although it makes no difference during the term of the mortgage, it's always worth using your isa allowance now, for when the mortgage is repaid ( you may not need the isa money to repay )

gaetss

apk1 wrote: »

Gaetss,

For your information Woolwich will allow cash ISA's to be offset, and I suspect others will too, although it makes no difference during the term of the mortgage, it's always worth using your isa allowance now, for when the mortgage is repaid ( you may not need the isa money to repay )

I looked through their website and cannot find anything. they say you can use an "openplan saving account". Barclay for sure does not allow ISAs, as well as Loyds, Natwest, etc.

frivolous_fay

The calculation looks great on the screen, but when we looked at it carefully, they were proposing we'd have paid everything back by a certain date; we totalled up the payments we'd have made by that date and they didn't even cover the basic mortgage, let alone any interest!

I like the principle, and my FiL uses this account and is very happy with it - I'm keen to understand it better, but the 'incredible mortgage shrinker' is BS imo.