Natwest - Shrink your mortgage?

andrew_xlb

Hi All,

I was wondering what the real catch (if any) there is with these accounts that combine your mortgage with your current account (much like the Virgin one account..)

For anyone who hasn't seen the ads, they automatically using any leftover cash at the end of the month in your account to overpay your mortgage - thereby shortening your term/reducing interest paid..

Has anyone got good / bad / indifferent experiences of this type of account?

phead

Best if you read the thread above "Offset Mortgages -- the Numbers" ,and use the forum search for "virgin one". Many of the benefits/problems are all covered in those threads.

Conrad

The One Account which RBS absorbed paid the highest commision of any standard prime mortgage, in fact 0.6% as opposed to c0.3%. This clearly was the lenders way to ensnare more deals as the lender considered it a much more profitable mortgage than standard deals.

That profit only comes from one place - you.

I once challenged the Virgin team to prove to me it was better value compared to remortgaging every 3 years on much lower available rates. They gave up. I crunched the calculations and found it was better to remortgage every 3 years to cheaper deals and then overpay the difference (ie paid the higher amount that would have been due on an offset account)

TEDDYRUKSPIN

This offsetting as explained by the above. I see no point of this really as the interest will only reduce around 3 months off a term of 25 years.

Every bank will allow you overpay. Some by 10% a year. Some 20% per month. And so on.