Is the One account any good?

wymondham

I'm not talking about interest rates at all here, just the mind set that having a current account gives you. If you read back whilst I make references to the One Account (as I know this) I also say ANY current account mortgage. Current Account mortgages focus the mind in a way I feel a standard/offset mortgage does not..

ailuro2, I take your point about Martin, but good as he is about moneysaving, he is not commenting on lifestyle changes which a current account involves, mearly moneysaving.

i feel bad that we've hijacked this thread on this so maybe we need a new one to discuss further????

ixwood

In that case, I'd say the First Direct (did you guess? lol) 10 fix would be a good deal for you. 5.35% (it was 5.15 originally) with full current account funcitionality.

I personally think rates are going to revert to historical norms (at least) over the next year or 2 and locking a decent rate in is a good gamble to take now. The "china effect" on inflation is now going into reverse and they'll be exporting inflation rather than deflation soon. The last 10 years unusally low rates was achived by low inflation casued by globalisation and the developing world reducing labour costs IMO. Now all the producer nations have cash to burn and are rapidly developing, they're competeing for the worlds resources we'd previuosly had pretty much to ourselves in the developed nations. And the worlds money presses are still on warp drive. Inflation is on it's way back!

Also means you don't have the hassle and cost (exit/entry/valuation fees and the risk of paying the SVR for a month or 2 between changes) of remortgaging every couple of years.

And the rates are very competitive really. Beats most discount/tracker mortagess/none offset rates anyway in most cases.

You can use it like a normal repayment mortgage is you choose, but obviously the offsetting aspect (instead of getting (taxed) interest on your saving, you don't pay mortgage interest on the same amount of your mortgage) is there as well and will help pay if off quicker if used.

Coupon-mad

I may be missing something but I don't see why you've stated 'standard/offset' mortgages as one thing, wymondham? They are completely different, but one-account/offset are similar to each other.

The OP says he doesn't know anything about offset mortgages but the one-account he's looked at is an offset mortgage, effectively.

So it is relevant to compare the one account with other offset mortgage products including comparing interest rates and customer service (at the moment, IMHO First Direct win on both counts, Watchdog reported only the other week about customers' satisfaction with their banks and FD came top by a fairly big margin from what I can recall).

I am with ixwood, his/her comments make a lot of sense. Why on earth do people think the one-account is a unique product???

ixwood

Hopefully we've helped the Op, not just stole the thread. I think we've both made our points now anyway.

wymondham

current account mortgages are 'one pot', whereas offsets tend to be many and often take more managing.. All generalisations I know!!! current account mortgages tend to be the most flexible and tend to be more automatic in the way they work

It is difficult to explain to people who have not had a current account mortgage (note i did'nt say one account??!!) how flexible they can be...

i think we'll have to agree to have different viewpoints here guys as we seem to be from different camps and people seem to be getting upset I could dare to sing the praises of the one account after ending my mortgage in 9 months flat using it's facilities to the full..... I thought that was pretty good going??!!!

ixwood

It was pretty good going, well done (genuinely), BUT, if you'd had a similar product with a better rate, you'd have paid it even quicker/cheaper.

There's no way you couldn't have. You advocate offset mortgages, so choosing the one with the best rate (and decent customer service) seems the next logical step.

Anyway, I've said my bit, I'll shut up now.

PS I have no vested interest in FD, other than being a happy customer and after looking around, appreciating their current deals look to be the best available currently.

PPS FYI My normal broker could only get 5.85% fixed when they wanted my business.

FreedomGirl

Hi,

Hmmm...lots of good pros and cons being put down here (and I've found out more about the other types of accounts too).

(ixwoods point in the next post about getting better rate on 10K of savings but worse rate on 150K of mortgage is spot on IMHO)

If I was taking out a current account mortgage (CAM) today (instead of in 2001), I'm not sure I would have ended up with the One Account (as I like the idea of offsetting my ISAs as well).

But back in 2001, I think this was the only kind of CAM product around, and I'm guessing that quite a few of the posters got their back in the early years of CAMs

One additional benefit of a mortgage where you can get back at your money even if you've got a positive balance (this should cover quite a broad church ) is when you're getting close to paying off the mortgage (as we are) because it means you don't have to carry lots of separate savings to hedge against the risk of losing your jobs.

Deciding whether a CAM is good for you is part numbers, part understanding your own psychology and part being about honest with yourself about your track record with the finances.

Here's my hypothetical (i.e. made up) person for whom a CAM could be something worthwhile (IMHO).

They would have...

...good money management skills (and planning and budgeting) including a strong track record of never or rarely having a balance on a credit card that's not paid of at the end of the month (I'm ignoring stoozing here) AND a good surplus at the end of each month which then gets saved (let's say somewhere in the range of 15-25% of income*) AND a good amount of savings (we had >40% of mortgage balance when we started)/large lump sums e.g. saving for tax bills.

*I'm just picking that number out of the air, on gut feel. It could be 10%, but a person sees scope for cutting back e.g. going without newer cars or holidays for a few years. I would want that percentage on the higher end of the scale if you were borrowing a larger salary multiple than 2.5-3xsingle or joint salaries (which is what it was back in 2001 - my, how things have changed :eek: )

Hey - don't panic, we certainly didn't have all of those in place when we started using it, but we learnt the money management stuff as we went along and improved the other stuff

Just my thoughts - HTH

FG
ps Just read wymondham's post and reviewd our history - we cleared six figures' worth of debt in 2.5 years (remember those savings-a big head start), then have been bouncing along in the range up to 30K limit since end 2003 as money has been moved to buy cars (the OHs habit!), fund pensions etc. Refocussed our efforts back in mid 2006 to clear it and should be there by the end of 2008.

Am not saying this to show off but to give people some context as to why it worked for us. Often the people who are very positive about the One Account are those who have large cash flow surpluses and savings (e.g. due to IT contracting) and can take this sort of fast approach to paying it off.

It's useful to bear that in mind when you're reading the positive reports about current account mortgages. But I don't think that they are just for rich b*ggers Anyone who is good with their money might enjoy paying off their mortgage via a CAM, and you certainly can have fun with managing your cashflow. OK - mammoth post over

ixwood

I only just looked ta Martins comments. I didn't realsie he slated it. I would have save myself some typing and just posted his link.

"great packaging but a poor product. While filming Make Me Rich I was saddened by how many people had fallen for the marketing.
Yes the idea of a mortgage which offsets your savings against your debts sounds good. And indeed it is good, the problem is the rate; it’s hideous - 5.75% - a monster - about 1.5% more than the cheapest mortgages on the market.

So for the sake of earning slightly better returns on £10,000 of savings, most people are paying massively more on £150,000 worth of mortgage debts. There are very few people the One Account is any good for. Most should ditch it and save themselves a good £1000’s a year of cheaper mortgage."
Now that offsets are available at the best rates, its certainly worth having the extra functionility for free IMO.

I'm reallt shutting up now.

getmore4less

wymondham wrote: »

current account mortgages are 'one pot', whereas offsets tend to be many and often take more managing.. All generalisations I know!!! current account mortgages tend to be the most flexible and tend to be more automatic in the way they work

It is difficult to explain to people who have not had a current account mortgage (note i did'nt say one account??!!) how flexible they can be...

i think we'll have to agree to have different viewpoints here guys as we seem to be from different camps and people seem to be getting upset I could dare to sing the praises of the one account after ending my mortgage in 9 months flat using it's facilities to the full..... I thought that was pretty good going??!!!

One pot solution has to be less flexable than an offset that includes current accounts,savings accounts, cash ISAs, accounts in different names

wymondham

getmore4less wrote: »

One pot solution has to be less flexable than an offset that includes current accounts,savings accounts, cash ISAs, accounts in different names

not really, only one pot to worry about, less hassle and all round easier to manage... better for lazy people!!