The One Account?

jamesd

Lennys_Shinpad, an offset mortgage is an alternative, particularly if you get one that lets you check your current mortgage balance online. Same immediate reduction of mortgage interest advantage but it keeps the overpayment pot in a different place. Once you've paid off half of the mortgage and/or are within 3-5 years of clearing the mortgage the One account current account mortgage starts to look more interesting because the extra cost isn't so large and is for a shorter time.

But no real need to offset if you aren't using your cash ISA allowances already, since using those probably pays more interest than can be saved by overpaying the mortgage.

wymondham

Lennys_Shinpad wrote: »

It's good too know that myself and my OH could still work with our own accounts (sort of).

It's not really designed to work the same way as having two seperate accounts and keeping your money seperate - it's primarily a shared account so you might not find it works how you'd like it. It does have the ability to show the balance in a number of different ways, but at the end of the day, it's one big pot!

dredwing

Interesting thread..

I'm considering an offset mortgage starting in early 2008. I have a 75k mortgage with 30K savings and have, in the passed, thought the One Account (I'm keen to get rid of my mortgage as soon as possible) might be for me - but seems their rate isn't the best. I'm also considering the Intelligent Finance offset as their rates are better and friends seem to find them good to deal with. I wondered if anyone has any thoughts on other accounts they might recommend currently offering both good deals and decent service. I'm leaning towards the One Account again after what I've read here and the impression I got when I made a few calls to their customer services to fire off some questions but I'm still not 100% decided so any comments very welcome.

Lastly I understand they offer a £150 reward back to anyone opening an account as well as anyone recommending them, I'm hoping someone here might want to share in the cash here ;o)

Thanks in advance.

wymondham

hi dredwing!

Hopefully this thread has shown how the One Account works - slightly differently to the IF account if I'm correct (??). It all hinges on how much 'spare' cash you have at the end of each month as to if the One Account is suitable (include your current mortgage payment in this 'spare' cash amount). whatever this amount is, is how much you'll reduce your mortgage amount each month. Are you disciplined with your finances?

dredwing

Hello Wymondham

Thanks for that, yes, I might not be good at many things but I'm very disciplined with my cash (too much so according to my partner ;o)

I usually have a fair bit left at the end of the month plus I have the large lump sum. I still have a few qurestions which I'll direct at the One Account folk (who so far have been very good on the phone) but overall I'm 90% sure I'm going for it.

Incidently I'm assuming the Nat West and RBS accounts are basically exactly the same?

Thanks again.

jamesd

dredwing, no real change on the comparisons between the One Account and others: it still has a much higher interest rate and people who have it still tend to be really keen on it even though it has a higher rate. Your cheapest option is probably a normal flexible mortgage with overpayment and drawdown facility. Next after that would be an offset, likely to cost 0.25% or so more. Finally come the current account mortgages like the One Account, with the highest interest rates - effectively on SVR for the whole duration of the mortgage. Any of these would normally let you repay as fast as you like.

The spare cash that wymondham talks about is the amount you'd use for overpayments or put into an offset account with a flexible or offset mortgage respectively.

One thing to watch out for when comparing mortgage deals is that the One Account will produce higher interest saved numbers for extra payments than mortgages with more competitive rates. That's because its high rate magnifies the number - a mortgage with a 100% interest rate would produce even higher savings but still be much more expensive. You need to compare total paid by you, not interest saved - this is your actual total cost.

wymondham

dredwing wrote: »

Incidently I'm assuming the Nat West and RBS accounts are basically exactly the same?

They are the same account, so might as well deal with oneaccount.com directly if you have decided this is for you.

Although a good point, I'd dispute the SVR point made above - it is not as high as other lenders standard SVR (about mid way), especially if you had a decent loan to home value - you could possibly be in the lowest bracket if your loan is lower than 50% the value of your house, currently 6.6% - lower than lots of SVR's about (Abbey is 7.59%)

Any other questions let me know - it took me about 4 months to get my head around the mechanics and decide!!

bunking_off

Think the point on the SVR is that those of us who have had the "light bulb moment" on the One Account tend to have very little of our mortgage sat on it.

For example, my mortgage is in the £tens of thousands sort of ballpark, but in practical terms I have approx 75% of it stoozed onto 0%/<3% life of balance credit cards. As such, my net interest rate I pay across my "housing debt" (prefer that term to "mortgage" as it focusses the mind on what it is) is about 4%. Yes, you can do that with more conventional mortgages/offsets, but the One Account really does make it trivial as it has an associated Visa card that you can directly balance transfer into.

The other aspect is that with an offset I guess (depends how it's set up) you consciously have to sweep any excess money into your offset savings fund at the end of the month, whereas with the One Account any money you've not spent is immediately reducing your mortgage. Would be interested to hear if any of the offset accounts either (a) link with your current account or (b) have a facility to automatically sweep excess from current account to saving...I honestly don't know.

The other thing I've done (accounts for 20% of my mortgage) is to act as "Bank of Bunking Off" for relatives...they pay their savings into my One Account, and I give them interest at the rate that OA charges me. Doesn't benefit me as such, but gives them a savings interest rate better than they'd get elsewhere. You could do that with an offset I guess...indeed makes me wonder why more of us don't do this.

One final thing which isn't so quantifiable. I can honestly say that the One Account team are the best customer services outfit that I've ever dealt with...been with them 7 years now, and they've been perfect plus always answered within 3 rings 24/7.

The One Account isn't for everyone...I'd say read up on the other threads to see the tricks people play, give it a year and see if you get into it - if you don't you can always revert to another style of mortgage.

jamesd

wymondham, SVRs are typically in the range from 1% to 2.5% above base rate. With 5.5% base rate that puts SVRs in the range from 6.5% to 8% and that's where the 6.60% to 7.45% range of One Account interest rates falls. You certainly can find some SVRs that are more costly than the One Account rates, particularly at the big banks.

A rate of 6.6% isn't anything to be really happy with. For example, L&C offer an offset mortgage deal up to 75% LTV for base rate plus 0.34% (5.84%) for two years then 6.5% with no fee. Unless someone specifically wants a current account mortgage I see little reason to even look at the One Account when alternative deals like that are available and save about 250 a year on 35,000 of non-offset mortgage amount. Though that one is a fixed rate deal and they offer some similar variable rate deals that might be more interesting given likely base rate changes.

bunking_off, the One Account can be convenient but personally I don't find it problematic to transfer my salary into my savings account and have a couple of standing orders to transfer money from my savings account to my current account each month. Setting up three standing orders and having a bill-paying current account that pays interest just isn't that difficult. No sweep from current account to savings account needed because the money doesn't live in my current account - instead I make occasional ad-hoc payments from savings account to current account as required.

You can do that bank of bunking off with offset mortgages. Some even offer independent offset accounts for the other people so you can't get your hands on their money, giving them complete capital security. What I'd do in your position is split the difference between interest rates you pay and the interest rate they could get from an instant access account. Then you both benefit a bit since you're paying them tax free interest. Particularly interesting for any friends who pay higher rate tax!

dredwing

Thanks a lot for the replies, it's certainly more complex than it first seems when you see how much you can shrink your mortgage by (time wise).

Another factor for me is set up costs. A lot of the other flexible mortgages I have looked at have big set up fees, the One Account seems to have lower fees (plus the £150 pay back if recommended by a friend).

For me it looks like a good option, I can reduce by mortgage term to 3.5 years without a massive stretch and thats my main goal - having no mortgage in 4 years time.

BUT...

I'm still unsure on the maths and the higher SVR does bother me (even though I would be on the lowest 6.60%) and need to spend some time working out exactly what's best for me, massive thanks for the contributions though.

A couple of other things that have a bearing for me are:-

1. Is there a Mortgage Exit Administration Fee (I have the possibility of a large bonus next year and might, just might be able to pay the lot off)?
2. Do they insist on you taking their insurance (something that has always really bothered me)?

Thanks again though, really helpful stuff.