The One Account?

wymondham

JoeShmoe wrote: »

It is a little more expensive (not hugely) but I cant find a fixed rate deal with comparable flexibilty to overpay at a comparable rate? Id also like the flexibility to overpay some months and underpay others which I dont see anywhere else?

Perhaps someone can advise if and how we could do better?

All I see is fixed rate deals with charges levied for overpayment? I guess if we could find a deal of about 6% fixed where I could overpay simply whenever I wanted and without charge I would look at it but I cant see one?

I also like the fact that I can have savings .. which I can use whenever I want. If I overpay if and when I cant really get that money back as it were

for flexibility you wont be able to beat the product. the only stipulation is you arrive at a zero balance after X years and you don't go over your agreed facility - apart from that, how you do it is entirely up to you. I also like the product as the fee's you pay to remortgage are tiny compared to other products (and you won't be remortgaging ever 2 years or so, so that could potentially be £1,000 (or the then going rate!) saved every 2 or so years??

teabelly

Once you factor in saving remortgage fees then I think the oneaccount is much more competitive than it first appears. Often they are a massive 2% so if you do that every other year then that saves you quite a bit in charges if you add them to the loan as you will also then be paying interest on that fee. Over 25 years you could remortgage 5 - 10 times then that is an extra 10-20k in fees + interest on those fees.

I also think seeing your mortgage as a massive negative number rather than just a small monthly payment gives you a level of reality which normal mortgages don't. It is quite sobering and liberating in equal measure. It's not for everyone and it depends on the individual circumstances as to whether you are better or worse off than having a good tracker/long term fix/good offset.

Soulistic

I have a question regarding the one account...

After having read Martin's article about "Are your savings safe"... I would like to find out if anyone found out whether all the money that resides in the one account (ie. savings, current account, potentially ISA's, etc.) is fully protected or not?

One of the concerns I have, given the current climate, is that anything could happen and I would like to maintain a peace of mind if things go badly.

Thanks in advance.

imakeenlearner

Hi Guys, first time post and keen to learn (as my name says)

I have a mortgage with the HSBC for £135k and my house is valued at £160k. My current mortgage deal is at 6.1% APR on a tracker with no set up fees or valuation fees and currently im on 0.89% above base.

Im also an employee of HSBC and get a subsidy of £70 after tax towards my mortgage repayments. The original term of my mortgage is 30 years, but what I'm curious about is that if I have £350 left after every month is the oneaccount for me?

Currently with the mortgage I have I can make unlimited payments without penalty, but I do quite like the fact of a big overdraft rather than monthly payments and currently only overpay of £150.

I might have missed out on some stuff but please let me know. Currently mine and my partners wage net is £2100 and with my current mortgage payment of £800 p/m we have £1700 outgoings.

Thanks for reading, and again all the help I can get would be greatly appreciated.

P.s. I have no savings, but I do get quarterly bonus of £500 (after tax)

Trying_to_be_good

My advice would be

1) Get a market leading cash ISA and fill that first (you and your partner can have one each). This should make more interest than you're paying on your mortgage, and can also be accessible should you need the cash.

2) Then look at overpaying on your current deal - I don't see the point in incurring expenses to remortgage when you can use your money in an ISA and potenital overpayments.

Keep your life and money as simple as possible, though!

imakeenlearner

Hi, appreciate the swift response

My only problem is that due to religion I cant benefit from interest, so hence me having no savings, well spent the savings on a depoit actually

nrsql

Is this a Sharia thing? Would you be able to take a interest accruing mortgage like the one account?

If it's just receiving interest that's the problem and there's no way to receive "interest like" payments on savings then it might make the one account a bit more attractive but I suspect you would still be better off with a lowe interest rate,
First direct have started up their fixed rate offset mortgages again - higher rate than before but lower than the one account.

imakeenlearner

Yep, it is sharia.

I understand that I will get charged interest, but have no choice there really. But what I want to really know is that which option is better for myself.

I do understand low interest and you need to work out what you pay in interest not just how much you save, but if it means cutting down the years and having more access to money (convenience) then that can sometime balance it out

jamesd

imakeenlearner, the One Account interest rate is too high for the duration your mortgage will have even with overpayments. It's more suitable when there would be only one or two years left but even then there are usually cheaper alternatives. It's entirely possible that you could get a Sharia-compliant mortgage at lower cost than this mortgage.

If you're willing to accept incidental interest from investments making interest only before the intended investments are made you might look to see if the BlackRock UK Absolute Alpha fund meets your needs for investing as an alternative to cash ISA use. It has quite stable growth and interest is not the focus or intent of its investing. However, effectively all UK collective investments do take at least incidental interest on balances that haven't yet been invested in their main area of interest so that substantially restricts your options. I think I've seen mention that there are starting to be some Sharia-compatible investment products becoming available in the UK as well but don't recall any specifics.

It seems that your existing mortgage meets your need to be able to overpay to save interest instead of making it. If it doesn't offer a savings account option you might look at offset mortgages. Those have an offset savings account that doesn't pay interest but instead reduces the outstanding balance on which mortgage interest is calculated by the balance of the offset account. You treat the offset account just like any other savings account. These are typically available at substantially lower interest rates than the One Account.

Now isn't a great time to be changing mortgage so unless some fixed term forces it you're quite likely to be best off by making no changes for a year or two.

wymondham

just bumping this thread as several people have asked one account questions recently which are covered here.....