Which One Account????

doger_2

Hi
Our fix rate mortgage is due to end in March, I am dreading the new rate!
After lots of looking I think a "One Account" is the best for us and if we really tightened our belt we could pay our £100000 mortgage off in 6 years.

Are there any hidden dangers in "One Account's"?

There are now a couple of institutions running a "One Account" eg Virgin, Natwest etc. Which is the best account?

Any other advice would be greatly received.

doger

UK007BullDog

I think you need to get advice on this type of account and not just go by what you read on here or on the lenders websites.

Personally I would say the NatWest one is the best. But then I am biased

To take on an account like that requires a "special" kind of person. Someone who does not lose their nerve when they get their monthly statements. Get well advised before you go for one of those. The rates are higher than "normal" mortgages. Do you get a high salary? Get regular lump sum payments?

The next best would be an offset mortgage.

But do get good solid advice before going for a one account type mortgage or any type of mortgage really.

wymondham

No hidden dangers as such other than are you financially responsible?
If you're not then don't get a current account mortgage (One Account) as you could blow the lot, if you are then it's a very different way of doing things - some like them some don't. It's worked well for me, but as said above get further advice before making a decision. If you have any questions on how the one account works etc let me know (it took me months to get my head around the concept!)

doger_2

Hi Thanks for the advice. We are feel that we are financially responsible, we have no credit card debts and put away about £500 a month. With this going into paying off the mortgage and a lump sum from an inheritance we are feeling more and more that the one account is for us.

Is it right that the more you pay off the lower the interest rate?

UK007BullDog

No, the lower the amount of interest you pay overall. The interest rate stays the same (depending on BOE fluctuations).
If I understood your question correctly.

Remember though that the NatWest flexible Offset mortgage can do the same and the interest rate is better. You should get face to face advice to make sure you chose the right one for you. It depends on the mortgage amount, income, savings, term of the mortgage etc.

toonfish

From a purely personal perspective I hate these things - I think you are better going for cheap trackers with an overpayment facility 99% of the time.

I have yet to come across a client with a "one account" type mortgage who has used it effectively unless they are using it as a cashflow tool for their business.

[Deleted User]

Is it right that the more you pay off the lower the interest rate?

No, that is incorrect. The rate you pay depends on the LTV (loan to value), the ratio of the mortgage amount to the value of your house.

Overpaying allows you to either reduce the lenght of your mortgage (= pay less interest) or reduce your monthly payments.

wymondham

toonfish wrote: »

I have yet to come across a client with a "one account" type mortgage who has used it effectively unless they are using it as a cashflow tool for their business.

count me in as one who did - my 9 year mortgage is now heading to be cleared in 1 year....

steviebilbo

Yes, you can count me in too :j - I have managed to reduce my term by 2.5 years (in 6) by using the RBS One Account - we have built up/left in over 30K in less than 4 years and my next deposit (Armed Forces gratuity) at the end of Sep will see the 'end' of our interest payments as the full 'facililty' will be in the account -and will stay there to give us the flexibility for the final 2.5 years as a safety net - endowments are showing some decent returns now too. :T

just my 2p worth!

UK007BullDog

That is great to hear. I will be changing my mortgage to the One Account too once I am out of my current fixed deal.