Can anyone reccomend a replacement to the One Account?

boiler-questions

We currently have a mortgage with the One Account.

It suited us perfectly when we got it as I was self employed and it allowed us to pay as much or as little each month providing that we always had some of the buffer left.

I'm now employed instead and although earning slightly less it is more secure and stable.

We are currently paying 4% interest though which is quite high compared with the norm at the moment.

The house is worth about 200k, we owe approx 90k.

The one account seems to have been abandoned now with them not taking on new customers and development on the website non existent.

So I take it there is a lot of room to make savings based on what we are left with. We can afford to pay about £800 per month on the mortgage.

We're quite used to the flexibility of the one account so would like to keep some element of this flexibility.

Is there anything on the market that would be suitable?

If not I guess it would be best to get a mortgage for say £100k and put £10k in a bank/savings account to give a bit of a buffer in that way?

ACG

They are known as offset Mortgages. There are a few lenders who offer them although I believe the one account was a truely offset mortgage where as with other lenders it is a mortgage and linked current/savings account so not 100% the same.

On the figures your talking, it may be financially better to get a conventional mortgage and just hold some of the money back in a savings account as you may be able to get more in savings than your mortgage would cost.

boiler-questions

Thanks,

I've seen that First Direct have a fee-free 10 year 2.89% deal.

Although the percentage isn't the cheapest I can find, the length of the term seems impressive and the fact that it is fee-free seems good too.

Does that sound a good alternative?

I could then get an ISA and a regular bank account to go alongside.

Pay to go to the regular bank account - any surplus to go to the ISA or overpayments on the mortgage.

That way I would gain some security from having the ISA available if necessary and would have the security of knowing that the rate is fixed for more or less the complete term of the remaining term of the mortgage.

I've just seen the Santander deal with 3% interest on 3k to 20k. This sounds perfect instead of an ISA. I could try to keep that around 10k - if I have extra I may as well keep it in there rather than over paying as it would earn extra.

Utilities could be paid from that account too - giving cashback.

Does that sound like a good plan?

First Direct 10 Year Mortgage Fixed at 2.89%
Santanader 3% Interest on 3k to 20k.

The combination of the two gives me more or less the security of the One Account.

Anything you would do differently?

getmore4less

There are loads of offset products and most are better than the one account ever was and have had better rates for years.

First direct have a interest only option which may be atractive, Barclays you used to be able to model close to interest only but they are clamping down/removing that.

Most will operate on a standard repayment with offset savings so give you the flexibility if you still need it.

FD have a lifetime offset tracker @ 2.99% or 2.49% with £950 fee
on £90k net debt £800pm thats breakeven in 2.5years with the fee based.

(the one account was not a proper offset it was operated more like a large secured overdraft).

AnotherJoe

I have an offset with Barclays which works well (mortgage is a woolwich one that's linked)


However with the very low rates on my mortgage much of the usefulness has now gone.

it does also allow you to create about a dozen separate "pots" which are like mini bank accounts I use that for saving for specific purposes like holidays and car though if I was starting again I'd probably be better off having high interest current accounts for those with different banks though it would be a lot more hassle.

getmore4less

THe great thing with the offset is you can chop and change, when the savings rates are better you move the money and make a little bit.

when the saving rates dwindle you move it back.

get a 0% shopping CC offset all your spend money(stoozing) and when the rates about to go up pay it off.

boiler-questions

Thanks for all the replies - really useful.

Can you explain the difference between a true offset mortgage and the one account? I don't think I understand what the difference is!

With the suggestion of interest only - would that be to try and get an interest only mortgage, just pay the interest only but then create a few different savings plans and save up the amount owing on the house? Then pay it all off in one lump sum at the end? So in effect I would need to try and save up £90k over the next 10 years or so - if I save it faster we can pay it off faster etc. Or is it wiser to pay of the capital as you go?

With regard to credit cards, I don't use them on a day to day basis but we saved up for a campervan - when it came to buying it we used an interest free credit card and put the money into the mortgage account. I have since been paying the minimum repayment each month. I then have the option of paying it all off at the end of the 2 year deal or my plan is to balance transfer the remainder to another card just before the end of the interest free period.

zagubov

We have a First Direct offset and find it useful. However it seems to have stopped letting you save in separate pots/accounts which removes some of its usefulness.

getmore4less

offsets give pretty much all the functionality of One Account.

The basic premise is you are borrowing less but still have access to the cash in the offset account.

ignore anyone that says things like your saving are earning interest at the mortgage rate all you are doing is borrowing less by offsetting funds it is the equivilent of being able to get overpayment back at any time.

Some even let you offet other peoples money(not on the mortgage) or with a joint mortgage you can offset your cash seperately so the other person can't walk off with it.

The advantage of interest only is it gives you more control over your money as you can stash the normal capital repayment in the offset account.

http://www.barclays.co.uk/mortgages/offset-mortgage
http://mortgages.firstdirect.com/our-mortgages-explained/offset
http://www.ybs.co.uk/mortgages/offset/index.html
...

the reason a lot went for the OneA was they had better marketing and a very misleading calculator that it was easy to input numbers wrong and it looked like you would save more.

A lot of people could have saved a lot of money by picking a better offset product.

Offsets/one account are nothing special all they do is save interest by reducing the debt the same as overpayments would, the main benefit is you can get you money out again.