One Account or Barclays Offset Tracker

Jimboceh

We quite like the idea of a current account mortgage to speed up its clearance. However we can't decide whether to go for the One Account 6.45% or the Barclays Offset Tracker at 5.94% (0.69% above BBBR) or a regular offset. We don't want tie ins or high fees either.

We need to remortgage soon.

Mortgage £225k
Savings to offset £20k
LTV 60%
Joint income £4300pcm
savings £500pcm possibly more

Are we on the right track with an offset CAM or do the numbers point elsewhere in Mortgage Land?!

Anybody handy with a calculator and some advice would be gratefully received.

Trying_to_be_good

Are your savings money you'll need (e.g. for a tax bill) ro will they be dedicated to the mortgage?

The Woolwich/Barclays lifetime tracker (normal not offset) is .59% above base (so 0.1% points cheaper - assumed LTV max 60%), without the £595 arrangement fee, and allows unlimited overpayments.

Also, the first £3,000 can be put in an ISA and earns more interest than you get charged, so is better placed there.

Do you need the flexibility of the offset/current account mortgage?

Jimboceh

No I don't need the savings unless in dire straits so it could be dedicated to the mortgage so long as I can get to it.

And no I dont NEED the flexibility of the CAM because we are in regular jobs with regular incomes. I would like however to get to my overpayments without too much paperwork if I ever need to.

Thanks for your reply.

wymondham

personal choice, but One Account customer service is excellent, whereas Barclays is .................. :rolleyes:

jamesd

Jimboceh, for the amount that you're overpaying the One Account current account mortgage will be more expensive than the Barclays offset tracker mortgage.

Using the Egg mortgage calculator at 6.45% borrowing 205k (225 less the 20k offset) with 500 overpayment each month the monthly payment would be 1877.78 and the loan will be repaid in 13 years 9 months at a total payable of 309,595.

At 5.94% overpaying 563.22 to get the same 1877.78 monthly payment the loan is paid off in 13 years 2 months with the total payable reduced to 295,736.

The non-offset flexible loan at 5.84% would have an overpayment of 589.63 to get to the One Account's 1877.78 monthly payment. The loan would be repaid in 12 years 10 months at a total payable of 288,849. Quite a significant saving over the offset one if you can take a bit of paperwork to ask for a drawdown of overpayments.

There may be no need to choose between the Barclays offset and flexible options. You may be able to split your mortgage into two parts, one offset, the other flexible. Say you want up to 50,000 of immediately available cash in an offset account, you could go with 50k offset mortgage and 175k flexible. Put the savings into the offset account and put the initial overpayments into the offset account until fully offset, then switch to overpaying the flexible one now the offset account is full.

You could even borrow 205k flexible and 50k offset and immediately deposit the extra 30k from the flexible mortgage into the offset account along with your 20k savings so that you start out with the full 50k available in the offset account and never pay the offset mortgage interest rate, unless you withdraw some of the money.

I don't know that Barclays offers this splitting of a mortgage but it's commonly available.

This ignores the current account balance that you keep, one of the key features of a current account mortgage. You can allow for that by reducing the amount borrowed by your average current account balance. For example, if your average current account balance was 2,000 the cost of the One Account 6.45% rate would drop to 306,088 and the time to repay would be 13 years 9 months plus one more month to get back that current account balance.

It's clear enough anyway: you'll pay almost 14,000 more with the One Account mortgage than with the 5.94% Barclays offset and you aren't planning to use the One Account features, instead sticking to the easy access to savings that the offset account delivers.

setmefree2

We have a Barclays Offset tracker - it's been fine. No problems to report.

Dixie99

I have heard that Barclays customer service leaves a lot to be desired, whereas in my experience, One Account customer service is fantastic. We have been very happy with our One Account which we opened 10 years ago and are 6 months away from repaying ! It's saved us thousands and thousands of pounds :jand are happy to pay a slightly higher interest rate for first class service.

Tesco_points_addict

For what its worth...I know from experience that Barclays customer service is BAD, so bad......I have unfortuantly got my offset with them (must move it!) They are ost unhelpful and lack knowledge on their own products. If i had known then what i know now, I would have paid a little extra and gone with the one account
TPA x

TallGirl

We have a Barclays Offset mortage and have had since 1999. We have never had an issue with customer service and I find the online banking really good.

Jimboceh

Is it really all about customer service? so long as payments etc are in place what need is there to speak to customer services? I presently do internet banking with the Halifax and rarely if ever speak to them.

Thanks Jamesd for your post. I will be looking into the details of splitting tomorrow. sounds interesting.

wymondham

Jimboceh wrote: »

Is it really all about customer service? so long as payments etc are in place what need is there to speak to customer services? I presently do internet banking with the Halifax and rarely if ever speak to them.

Thanks Jamesd for your post. I will be looking into the details of splitting tomorrow. sounds interesting.

this is true ... to a certain extent. When things go wrong with banking it's usually fairly important and urgent, and if you can't understand the person on the other end of the phone for whatever reason then this is extemely frustrating! - in a perfect world though you are right and it should be rare you need to speak to people.....