Virgin ONE account

3stones

More a reflective post than a Question. We took one of these out about 20 years ago and have always felt it was a good product. We have about 20k left on an original £60K loan to pay of on a £460k house and still have plenty of time to do that,
Looking back on it though I do feel that an offset mortgage like this has discouraged us from building up an emergency fund as it almost acts as a financial security blanket for any large expenses that crop up. It has been a case of " oh whack it on the mortgage worry about it later" which we did but the amount has remained static at 20K for around 10 years as the term has reduced.
Luckily pensions are in place for a few years time but this is the year to tackle the remaining sum,
Just wondered how other people have found thir offset type mortgages and wether they fely they fell in the same trap that I feel we did.

charlie792

Way I see is is my offset account IS my emergency fund. No point it sitting in an easy access account earning pitiful interest rates when my mortgage rate is higher. The money is working for me whilst I don't need it and it's easy access if I do.


I would have thought over 10 years you should have made some dent in the balance owing - are you not making any capital repayments?

getmore4less

The one account was never a great product there were better options in the market at the time on lower rates that achieved the same goal.

We saw the offset as an opportunity to pay the mortgage off quicker by maxing out the offset with any cheap money that could be found(stoozing) and easy access if needed.

All product of the offset type only work because you are overpaying(borrowing less) if you keep using the money the saving are much less.

The early one account calculator had a easy to miss flaw(double counted the mortgage payment) that fooled people into thinking it was going to save them loads of money.

The test is to check what payment you need to pay off at end of term is to stick the numbers into any repayment calculator.

3stones

[QUOTE=charlie792;76735991

I would have thought over 10 years you should have made some dent in the balance owing - are you not making any capital repayments?[/QUOTE]

Yes I should have done. Its funny my first mortgage was a standard repayment one back in the early 80s and was for 68K. Although we were not on particularly high wages then we hit it hard and paid it all of in 11 years and so took that equity on to the next house. I think the nature of the Virgin One and how it works made us a bit complacent. Still I am going to pay it down to about 2k this year and just use it as a bank account. That might not be text book MSE but i'm not one for hopping around different banks.

[Deleted User]

Found it good for us as it was a flexible way to pay down faster when needed. It also provided a facility which we used as a very short term bridging loan.  Never been tempted to add any further debt (not in my nature).  The account is now next to useless however as there's now a £1000 per day transfer limit.  It's £20K for other RBS personal accounts.  Either they think they have some serious security weakness or they're trying to get shot of customers.  I even tried the Open Banking approach.  Tried to transfer £2.5k, when I got to RBS to approve the transfer it said that this would breach the daily £10K limit despite having done no other transactions that day! RBS is a shambles - but of course, spending money on re-printing all the stationery to NatWest will sort things out!

zagubov

We had an offset mortgage that we paid off as if it was a repayment.
When circumstances required it, we used it as an emergency fund. That was invaluable to us and dug us out of a hole.
When we got closer to retirement, we switched to a cheaper repayment mortgage in the end. Still paying it off in retirement but we've got pensions and reliable part-time work to fund that.