Is the One account any good?

_bankrupted

Looking at the link provided by ixwood, I agree that FD does seem a good deal and if I was choosing today ( or needed to increase my borrowing) I would almost certainly go with them.

However, one point to bear in mind is the deals offered are an introductory discount, the account then reverts to the variable rate of 6.25%. I pay 6.35% with the one account, so the rates are not so very different. Of course you can borrow up to 80% LTV at this rate with FD so again it beats the One Account, since One Account interest rates are tiered as the LTV increases. And there are fees involved for the best discount rate offered by FD. So its case of doing the sums. But almost certainly FD is a better deal.

BUT and here is the but, if you want to move on after the deal then that will involve opening a new current account and all the hassle of transferring DD etc. The alternative is to use a normal current account for bill payments etc and your offset accounts are just holding accounts transferring the necessary monies into the real current account to meet payment requirements. But it's hassle.

I am sure there is a quote from Oscar Wilde about advise and passing in on as it of no use... So here mine, and feel free to do just that.

Get the best offset introductory deal (FD looks good for starters, but there may be better)

Keep your normal current account with all the associated automatic debits and transfer the required money to it to meet them.

Looks at re-mortgaging when the discount expires to the current best offset deal.

ixwood

There's fixed (discount) rates and trackers.

first direct life tracker mortgage - less than £200,000

Tracks the base rate plus 0.49% for the life of the mortgage, currently 5.74%.
The overall cost for comparison is 5.9% APR.
(life tracker mortgage arrangement fee £399)
first direct life tracker mortgage - more than £200,000

Tracks the base rate plus 0.34% for the life of the mortgage, currently 5.59%.
The overall cost for comparison is 5.8% APR.
(life tracker mortgage arrangement fee £399)
The life tracker mortgage tracks Bank of England Base Rate for the duration of the loan, and therefore your monthly payments will go up or down in line with changes to the Bank of England Base Rate.


I perosnally think IR's are going to go up, lots, so i think fixing for 10 years at that rate is a better option, but that's obviously a matter of opinion.

getmore4less

wymondham wrote: »

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

Now that is clutching at straws there is no flexability, it's put money in take money out.

With an Offset that allows current accounts to be offset you can do that, more if you want but you don't have to.

So more flexable and cheaper it would seem.

Doh

ixwood wrote: »

There's fixed (discount) rates and trackers.

first direct life tracker mortgage - less than £200,000

Tracks the base rate plus 0.49% for the life of the mortgage, currently 5.74%.
The overall cost for comparison is 5.9% APR.
(life tracker mortgage arrangement fee £399)
first direct life tracker mortgage - more than £200,000

Tracks the base rate plus 0.34% for the life of the mortgage, currently 5.59%.
The overall cost for comparison is 5.8% APR.
(life tracker mortgage arrangement fee £399)
The life tracker mortgage tracks Bank of England Base Rate for the duration of the loan, and therefore your monthly payments will go up or down in line with changes to the Bank of England Base Rate.


I perosnally think IR's are going to go up, lots, so i think fixing for 10 years at that rate is a better option, but that's obviously a matter of opinion.

these are not offset mortgages though! so you are not comparing apples with apples - for example when you factor in the £45k savings i've got (mostly stooz) at 40% tax the figures don't add up...

as mentioned above when comparing the non discounted product rate of 6.25%, the 0.2% really isn't much of a saving over the 6.45% one account rate - plus you'd loose the one accounts VISA mule, which given the situation with Egg currently is definitely worth having.

ixwood

Good point, I'd assumed the trackers were offset as well, as all the others were.

Still a a saving though. And the 10 year fix at 5.35 is massively cheaper. Looks a good bet to me, especially if you plan to pay it off in that time frame. Even if you didn't and didn't bother remortgaging again, you'd have had 10 years much cheaper and the rest at a little bit cheaper.

I thoink there's a lot more risk on the upside of inflation/interest rates than the downside and think fixing now would be a prudent move. Fix at 5.35 and the Interest rates would need to come down to 3.75 before the One account rate would be better. Seems a bit unlikely, whereas rates could easily go up to 6, 7, or even 10+%. It s happened many times before.

Fixing Looks like a decent bet to me.

Doh

ixwood wrote: »

Good point, I'd assumed the trackers were offset as well, as all the others were.

Still a a saving though. And the 10 year fix at 5.35 is massively cheaper. Looks a good bet to me, especially if you plan to pay it off in that time frame. Even if you didn't and didn't bother remortgaging again, you'd have had 10 years much cheaper and the rest at a little bit cheaper.

I thoink there's a lot more risk on the upside of inflation/interest rates than the downside and think fixing now would be a prudent move. Fix at 5.35 and the Interest rates would need to come down to 3.75 before the One account rate would be better. Seems a bit unlikely, whereas rates could easily go up to 6, 7, or even 10+%. It s happened many times before.

Fixing Looks like a decent bet to me.

agreed, i will certainly be keeping an eye on it, though it looks more that likely we'll get another rate cut this year i may hold off and see what happens:beer:

Desperate_Housewife_2-2

Nice to read everyones different points of view.

In answer to the op question, IMO the one account has been good for me, yes, the interest rate is higher than others but if you have savings it doesn't matter too much especially if you are in credit some months. I find the customer service side of things very good and when I got it there wasn't many other current account mortgages around. Now you have more to choose from.

I'm happy but I wouldn't want to influence anyone as I don't know your individual circumstances. Look into it and make your own decision, there are lots of people who are satisfied with it, I'm one of them.

The idea is a good one whether you go with them or another provider, the principle of these accounts are good and allow you to be in control. Good luck whatever you decide!

MPwannasavemoney

Lettyx1 wrote: »

I currently have 14 years left on my mortgage and I'd like to reduce that at least by half. The One account looks good to me, but I am aware of the saying "if it looks too good to be true then it usually is" - do people recommend this way of managing one's finances? I haven't found anyone that has this account to discover whether or not it's any good. Any advice out there?? (The end of my 2yr fixed rate ends in June). I'd love to be mortgage free when I'm 40 rather than 50 which is where I'm currently at....:D

Investigate very carefully. I'm leaving for another account because:

1) the OH doesn't understand it
2) when savings have diminished the interest 'saved' as a result of that money being in the account is lost and you are then fully exposed to the quite high interest rate
3) the interest rate is actually higher than they quote as they calculaet daily and charge interest on interest for the rest of the month until they take the interest for that month out!

Doh

MPwannasavemoney wrote: »

3) the interest rate is actually higher than they quote as they calculaet daily and charge interest on interest for the rest of the month until they take the interest for that month out!

eh? explain...

_bankrupted

MPwannasavemoney

In the bad old days a bank would charge interest on a mortgage as follows:-

Look at the outstanding amount at the start of the year, charge a years interest on this figure, and then add it to the account immediately. You would then have 12 equal payments (assuming no interest rate changes) to reduce the outstanding amount. At the start of the next year your new outstanding amount would be less than at the start of the previous year.

So those 12 payments were really the interest that was added at the start and a little of the captial that has been reduced.

But the point here is that after your very first payment at the start of each new account year, you no longer owe the bank the original outstanding amount, it has been reduced by the capital that you have paid back in that months payment. So the next month payment should be slightly less since the interest charged should be less as you owe the bank less. But it isn't, the banks method of calculating the loan consider that none of the captial has been reduced. Only at the end of the year do they re-apply a new calculation.

So daily interest is a much cheaper method. You are only paying interest on the money you owe. In the case of the One Account, the interest is calculated over the month on the daily outstanding amount and THEN the interest is added at the end of the month. It is not compounding itself each day.

Not directed at you personally but if someone does not understand the difference in concept between an account that charges yearly interest and one that charges daily, they are unlkely to ever use an offset account to it's maximum potential.

Also it's worth noting that banks generally now calculate daily/monthly interest on most mortgages.