One Account Advice

jabei

Hi all

I'm sure this has been covered before so apologies if it has...
I've just been advised to change my mortgage and move to a one account. Does anyone have a view as to whether this would be a smart move or a stupid one?

regards
John

homer_j_3

depends on your specific circumstances. Who advised you and why?

jabei

An IFA.....I wanted a view on the interest rates increasing all the time...I have around £55k debt (inc Mortgage) on an income of around £40k.

The picture he painted was very rosy with a One Account - almost seemed too good to be true !!

homer_j_3

is he recomending the current account mortgage or just the flexible one?

jabei

The current account

homer_j_3

it can be good for people who are strict with spending and running their accounts. You have to set up the accounts in a certain way to maximise the effect.

I think if you use their credit card, they take payment fortnightly too so use your own to pay for all your expenses and pay that back with your interest free period.

without knowing your exact situation its difficult to say. Its variable rate, it needs strict running of your bank account but can be beneficial.

trf1960

If you are the kind of people that homer describes then yes, it is an excellent product. If you spend every penny every month and/or use an overdraft forget it (they probably would not consider you suitable for their product if you did anyway!).

All I know is that we paid off our £84K 'borrowings' in five years and am now debt free.

jabei

Thanks for that.. still don't understand exactly HOW the fast debt clearance happens

AndyWallace

You build up savings in addition to repaying your mortgage payments. For every additional £ you save, the mortgage balance (for interest purposes) is reduced by the same amount.

When you have built up sufficient savings, ie the amount you owe on your mortgage, you are debt free.

A common misconception is that people are led to believe they retain their savings, which of course isn't true.

Pollycat

This type of mortgage was perfect for us, we too are 'debt-free' - and lovin' it! :j :j :j

but, for most of the people we know, it just wouldn't work.

As Homer says, you need to have a certain (strict) mentality towards managing your money.

If you're not that type of person, it could be the worst financial decision you ever make.

Think carefully.

Polly

kenshaz

Pollycat wrote: »

This type of mortgage was perfect for us, we too are 'debt-free' - and lovin' it! :j :j :j

but, for most of the people we know, it just wouldn't work.

As Homer says, you need to have a certain (strict) mentality towards managing your money.

If you're not that type of person, it could be the worst financial decision you ever make.

Think carefully.

Polly

I agree play the game and you are quids in,exactly the same principle used in
0% interest rate card movement,if you are savvy go for it.Financial institutions
statistically evaluate the consumer and the odds are on their side with this product.