Unlimited extra payments oneaccount style?

digitaltomo

I've been reading a lot of the posts about getting a piggy bank with a speech bubble to save towards my mortgage in one of the other posts and thought it was an excellent idea.

The only mortgage ive heard of that does unlimited extra payments is the Virgin OneAccount and i quite like the idea of tying up all loans and everything into one giant overdraft, especially since Lloyds TSB seem to keep me in this debt loop by putting extortionate interest rates on everything and being quite vague about the whole process!

I was wondering if anyone can offer me advice on the Virgin OneAccount and any other mortgage/account options that offer similar things, or even just unlimited overpayments and the benefits/pitfalls of these. My circumstances follow:

• Now my mortgage is with the Abbey National of around £45000 over 25 years which was taken out a year ago.
• I have a £2000 overdraft that is maxed constantly with Lloyds TSB
• I have a loan with Lloyds with an extortionate interest rate which i have a few months left to pay off on at £150 a month
• I have finance for my beautiful macbook which is £30 a month over 3 years which i dont really worry about as its only around 5 or 6% interest.

• Between my girlfriend and I we take in around £1500 - £1600 per month.

Back onto Lloyds TSB....

Around 2 years ago I took out a loan for £5000 over 5 years to clear my Lloyds credit card and didnt realise, nor was told, for 3 months that the interest rate was around 3.5% more than the credit card, at 22.5%. Then when i went to pay off the loan after 9 months of payments I had to pay £5040 to them, despite having paid around £1300 already. They said something along the lines of "the interest was to be paid off first". In the end i paid and realised that customer loyalty counts for nothing anymore, having been with them since i was 12, and having my mortgage, home insurance, contents insurance, life insurance, current account, loans and credit cards with them! Just in the seven years since i turned 18 they have made over £10,000 in interest/charges/no-claimed insurances.

When i got my mortgage when i was 18 with Lloyds my Dad was on the mortgage along with me as security, and it was agreed with Lloyds that he could come off it once i was stable. Around a year later i was and they said i would have to take out a new mortgage and ignored the arrangement (which was verbal, i think) we had made with them which led to a lot of arguing and trying to sort it out to save wasting loads of money. At the time my house was valued at £24,000, by the time we were done trying to sort this out my mortgage turned into £42,000 with house prices going up, plus loads of mad crazy charges for surveys and legal fees.

I HATE LLOYDS AND CANT WAIT TO MOVE EVERYTHING FROM THEM AND RECLAIM £1000's IN CHARGES... THEY SUCK!

silvercar

Just a few points from your large posting.

All offset mortgages will allow you to overpay and take back the money when you want. Virgin one is an example of an offset mortgage. Others are Intelligent FInance (IF), yorkshire BS, Birmingham, Natwest, coventry all do offset mortgages. compare the rate to ensure you are getting a good deal. Additionally there are truly flexible mortgages that allow much the same thing.

Some link your current account into the mortgage and some only have a savings account.

The downside to putting all your debts on your mortgage is that your home is at risk if you don't keep up repayments.

At the time my house was valued at £24,000, by the time we were done trying to sort this out my mortgage turned into £42,000 with house prices going up, plus loads of mad crazy charges for surveys and legal fees.

I don't understand this, if your mortgage was for £24,000 then it won't have increased just because your house increased in value. Having already bought your house you are unaffected by its value. In fact any increase would have meant you could look at better deals with a lower loan-to-value.

As for crazy charges, the other option would be to stick to the existing mortgage.

jamesd

If you look for flexible mortgages the ability to overpay by unlimited amounts is normally a feature. So is the ability (with lender's permission) to draw down to withdraw those overpayments occasionally (think in terms of once a year rather than twice a month).

Beyond that you get into offset mortgages which maintain one or more offset savings and/or current accounts where the balance is used to reduce the mortgage capital on which you pay interest. Permission not needed to take money out of the offset accounts and you can easily do it as often as you like, unlike drawdown facilities. Offset interest only mortgages are particularly interesting because the capital parts of the repayment can go into the offset account and rapidly build up a large emergency or home improvement fund.

When the mortgage interest rate is below the ISA interest rate offset mortgages with linked cash ISA accounts like the one from Intelligent Finance can be interesting because you can shift the accumulated cash ISA sum to external ISA accounts if they offer the best rate and back into the mortgage offset account when they don't.

Most expensive of all is the One Account, which has a very high interest rate and makes it take years longer to repay your mortgage compared to the types above. The One Account doesn't do comparisons with other daily interest calculation mortgages so theirs looks better than it really is. Martin specifically recommends against the One Account in his mortgage guides.

digitaltomo

cheers JamesD, think the flexible one sounds best. nearly went with the oneaccount jsut cos of the virgin brand!

one more thing, any chance someone got a link to the best deals on flexible mortgages on here and a bit more info on them too possibly?

cheers

jamesd

Best to look at the mortgage comparison sites initially. Those often have best buy tables and you can put in the property and mortgage details and get a custom list of deals you might qualify for. Final stop: a broker to see if they can do better. There are some broker-only deals out there.