The One Account?

jamesd

SALTY69, any flexible mortgage will let you overpay by 500 a month.

One interesting one is from Intelligent Finance because one of the offset accounts you can use is a cash ISA account. This lets you build up money in your ISA until you're fully offset and all of your monthly payments come off the mortgage capital. Then you gradually transfer the money from the offset ISA account to an external ISA account while continuing to make the monthly mortgage payments to replace it in the mortgage. The end result is that you'd have more than 36,000 in tax free ISA savings after ten years of 3600 a year of ISA payments and you'd keep this benefit even after the mortgage is ended.

I don't know what deal you qualify for based on loan to value so I'll use their 6.24% life of mortgage tracker at 6.24% with 999 fee. To be consistent I use the Egg mortgage calculator. 6.24% on 40,000 for ten years of repayment mortgage comes to 448.92 a month, 53,87.19 total to pay.

Now add 500 a month and the total to pay falls to 45,270.32 and the term drops to 4 years with 948.92 a month being paid. Can't use the pension in five years - the mortgage is already fully paid off. But if you used the ISA offset method you'd keep the mortgage open with four years of 3,600 ISA payments in it totaling 14,400 then when you get the pension you could move the ISA money to another ISA elsewhere and pay off the 14,400 with the pension money, so you get to keep on getting tax free interest from the ISA money.

Whatever calculation you get for the One Account, plug the same numbers into the Egg calculator to make sure that the numbers add up properly. People demonstrating the One Account sometimes do things like asking "how much money do you have left over in your current account each month" and add that as extra overpayments without telling you. The Egg calculator will reveal that the numbers don't add up.

I'll assume that you have more than 50% equity so get the lowest NatWest One rate, 6.85%. At the 90% limit of the Intelligent Finance mortgage I used the rate would be 7.30%. Putting 6.85% into the Egg calculator the monthly payment is 461.35 and the amount to pay is 55,361.70. To get the same 948.92 a month with overpayments the IF mortgage means only 487.57 is overpayment with this mortgage, the rest is extra interest because of the higher interest rate. The term falls to 4 years and 1 month and the total paid 45,888.53.

So for this comparison, the One Account costs you 45,888.53 - 45,270.32 = 618.21 more and an extra month to pay off the mortgage. That is, an average of 12.88 a month in extra money paid by you for the whole four year term.

I don't know what the arrangement fee is for the NatWest mortgage. If it's less than 380 the NatWest deal would be cheaper because of the 999 fee for the IF mortgage I used. There are cheaper deals around, though, I just picked the most flexible IF one. It's really best to chat with a mortgage broker and ask them to find you the best deal with the features you want.

Kaz2904

I looked at the one account for my mortgage of £66000 with £15000 savings and it was going to cost me more than £100 extra each month and take a year longer than my present deal which expires in 2010.
Come 2010 I will be looking around at all possibilities and looking for the cheapest deals as I will only need the mortgage for around 2 years after that.
I may well go for an offset mortgage then but only if it stacks up with balance transfer deals on credit cards.

FreedomGirl

Hi,

VirginOne did become the One Account (run by RBS) - that's correct. I wasn't clear where the NatWest One account came from (sounds like it's the same family) so called it the Virgin One in my post to help differentiate it...

Re the poster who asked the Q (jamesd?) about whether this was really the cheapest way of doing things, I don't think the new breed of offset mortgages (e.g. separate savings pots) were around in early 2001, when we took out this mortgage.

I recently had a look at the total "money in" number when I was exploring the online software (just over £510K in just over 6.5 years-couldn't believe it at first!!) so I suspect there's enough “churn” to make it worthwhile? (Not backed up by calculations, more a gut feel - it's Sunday ).

HTH

FreedomGirl

jamesd

FreedomGirl, I wasn't looking at mortgages around then but Virgin did change things in a big way, starting the trend to increased flexibility. Regardless of their pricing today they deserve credit for that!

Really can't say how much the churn shows. Depends on the interest rate differences and how long the money is in each month before it comes out. Given when you did it, though, there's a pretty good chance it was one of the better flexible options around.

DickDastardly_2

Yep as above ^^

The original account, as I said, was started by Virgin and is still run by them from their offices with their staff who are excellent. However Virgin Finance was taken over by RBS who subsequently also accquired NatWest. Now NatWest are offering the same account as are RBS under their own branding. Difference is you will get NatWest staff who in my experience are not that good especially when things go wrong. You may like to experience this first before you start y comparing the websites: Virgin One is the same as RBS but NatWest is all show and no go and it takes an age to find the detials about interest rates, kind of vital information really......:rolleyes2

Anyway, whatever one you plumb for make sure to go through anyone on here as via reccomendation can earn each of you £150!!:T

noh

DickDastardly wrote: »

Yep as above ^^

The original account, as I said, was started by Virgin and is still run by them from their offices with their staff who are excellent. However Virgin Finance was taken over by RBS who subsequently also accquired NatWest. Now NatWest are offering the same account as are RBS under their own branding. Difference is you will get NatWest staff who in my experience are not that good especially when things go wrong. You may like to experience this first before you start y comparing the websites: Virgin One is the same as RBS but NatWest is all show and no go and it takes an age to find the detials about interest rates, kind of vital information really......:rolleyes2

Anyway, whatever one you plumb for make sure to go through anyone on here as via reccomendation can earn each of you £150!!:T

The One Account and the NatWest One Account are both run and administered by The One account Ltd which is wholly owned by RBS. Whichever bank you apply through it will be the same admin staff based in Norwich.

Nigel

angelavdavis

I ran a One Account (was then called Virgin One) for six years and, as a result, reduced my total owed by an additional £15k thanks to the excess monies sitting in my account during this time (I earned good money and got bonuses).

I took it out when even Woolwich weren't doing their offset account and it was a great way to work. However, when I switched jobs to a more fixed income, I decided to move the mortgage to a fixed rate. I haven't gone back to them since because the rates are more competitive elsewhere tbh.

The only downside was reading your receipt if you took out cash from the cashpoint and seeing that you are overdrawn by the mortgage account - in my case at the time, seeing a balance of -£102,000 was scary :eek:

bunking_off

angelavdavis wrote: »

The only downside was reading your receipt if you took out cash from the cashpoint and seeing that you are overdrawn by the mortgage account - in my case at the time, seeing a balance of -£102,000 was scary :eek:

From the standpoint of getting the psychology correct (a debt is a debt, even if it's been incurred to buy a house) I'd say that was a positive rather than downside. There's nothing like seeing a £102k overdraft on your balance slip to focus the mind about whether the nice plasma screen you were toying with buying is really necessary....

angelavdavis

bunking_off wrote: »

From the standpoint of getting the psychology correct (a debt is a debt, even if it's been incurred to buy a house) I'd say that was a positive rather than downside. There's nothing like seeing a £102k overdraft on your balance slip to focus the mind about whether the nice plasma screen you were toying with buying is really necessary....

I like your style

minimoocow

Sorry, not been back on here since my last post - to answer the question I think it cost us about £200 to transfer and it really was very simple considering we moved current accounts, savings and mortgage all in one! Everything was sorted within the same month so no worries about which account the DD was going out of!

Utimately we knew we wanted to move the mortgage once and then have it paid off within 5 years. I do think that a lot of people don't factor in the admin charge (both at the start and end of the fixed deal) which means they aren't as competitive as they first seem - especially with balances as low as the OP has. If the interest rate hadn't gone up we would have been about the same but it was a risk we knew might not pay off and it hasn't! On the otherhand if we were looking now maybe it would have!!!