Anyone got a One Account ?

[Mozzer]

Just been told by Woolwich that my mortgage needs renewing in August and that they can give me a really great deal. Then I saw on the internet that for new customers they can offer an even really better deal - why have I got the phrase "New Customers Only" in my mind ?

So now I'm thinking of taking my money (well specifically my debts ) elsewhere and the One Account think they can save me 60k and pay my mortgage off 6.5 years earlier.

Sounds too good to be true, anyone offer any advice ???

 

[Thmsshaun]

The thought behind the one account if good providing you are disciplined with your money or you could end up getting into a false sense of security and taking longer to pay.

In essece the one account is a big overdraft.

Wages paid in, bills go out, anything left over pays off the debt.

Should you say then spend £2k on a holiday that month you would have paid nothing off on the mortage and so on.

In essence it is no different to just overpaying your mortage. You could nock just as many years off by setting up a monthly standing order for £xxx whatever you could afford to your existing mortgage. This would also then save you in interest. It would also be clearer to see exactly what you owe and what is spare as the accounts remain seperate.

 

[nickg]

Woolwich do the same as the One Account. It's called an Offset Mortgage.
I've got one.
Previous email explains the basics.

If you've got spare cash each month, and have a savings account which pays paltry interest (and on which you get taxed up to 40%) then using the cash to pay down your mortgage makes great sense.

e.g.

You have £10K in savings. It is sitting in a deposit account that pays 5% interest gross pa.
You thus receive £500 interest pa. If taxed at 40% you receive £300 net interest.

You can pay this £10K into your offset mortgage account which is charging you interest at, say, 6%. You therefore save £600 in interest and you have no tax to pay.

In order to get the same benefit from your savings in a deposit account, or any other type of investment that is taxed as income at 40%, you would need to earn interest of 10% gross (6% net).
You therefore earn the equivalent of 10% gross (very good return these days) and, just as importantly, you bear no investment risk at all.
None of this "the value of your investment can go up as well as down" stuff.

The cash is available to draw out if you want, so it is not tied up.
You need some sense of prudence to prevent yourself splashing out £80K on a new SL.
But on the other hand, you can derive great satisfaction from seeing the balance on your mortgage going down really quick as you continue to make payments into it.

With the Woolwich, your "current account" and "mortgage account" are kept separate. You can view balances any time on the internet, and they send you monthly statements.
The statement also shows how much you are saving each month by utilising the offset arrangement.
You will pay off your mortgage early providing you don't draw out more than you pay in. This is not a miracle product, just simple maths. But it is a great way to save paying tax.

 

[Aswall]

I have the Halifax equivalent (IF account). I overpay on my mortgage payments. but the chief benefit to me is, as Nickg mentioned, is the avoidance of paying higher rate tax on the interest. As with the Woolwich, the various accounts (current, mortgage, savings) are kept separate on paper so it's as easy as an ordinary account to administer.

If you don't have spare cash and are always overdrawn then these types of account are probably not for you, but otherwise it's definitely worth a look - I wouldn't go back to an ordinary current account

 

[nickg]

me neither.

 

[mark.t]

money

eggs in one basket...not very keen on that but that's me ...6.5% variable, they will try to lend you more than you require you pay the money back in as you get the same % on your savings but because there working for you in reducing the mortgage term they also charge you 6.5% if you require any of your savings out its called drawdown .also watch the variable bit court out a few people 10 years ago

 

[MattEly]

Hi Guys

We moved from an Abbey standard repayment mortgage to the One Account a couple of years back. I'm delighted with it, but it did take a while to get used to! Initially, everything appears as one big pot, which is confusing, but you then create "virtual" accounts - mortgage, "car loan", current account, savings accounts etc - which makes it very easy to use. If you have say 100K mortgage and 10K savings, then you are only paying interest on 90K. Interest is calculated on a daily basis, unlike the old Abbey mortgage, and if you can leave as much money in as possible until just before you next get paid, you can save quite a bit.

The flexibility of being able to overpay on the mortgage is great - so we have a 25 year deal, and have set up our "virtual" mortgage account to pay back over 19 years, while the car loan pays back over 5 years. We could of course change these both to 24 years now at any time, without needing approval, if things got rough!

Also, the service from the One Account is excellent - they even send you pre-paid envelopes for paying in cheques etc!

So, overall I think that this is a great account.

Hope this helps,

Cheers

Matt

 

[grasmere]

dont worry about 'eggs in one basket' after all they are actually debts in one basket really!

I have had a Current Account Morgage for about 4 years and its the best account I have ever had - BUT you need to be disciplined and work the plan.

Whats the plan you ask ? Well you need to ask who'sever mortgage you are looking at eg ONE and ask them to show you how to save the figures they refer to, consider if you can work to that, make a decision, then work the plan . .

Good luck - you CAN save thousands of ££££££££££££££

 

[Mozzer]

Thanks for the feedback guys - our situation is as follows :

I earn a salary paid every month and out of this goes PAYE, Pension, mortgage and bills for the house we live in, etc.

My Fiancee is self employed and therefore gets paid as and when she gets work and she keeps 40% in a savings account until the tax man wants his cut, then she pays him out of the savings account and spends the rest on shoes.

I don't think I am going to talk her into this until we are married (September) but wanted to understand whether we would gain by using a one account. If we pooled some or all of our monies into a one account, for many months of the year, we would have a lot of money over because if nothing else, the tax man's money would be sat there, so that's a plus I think, but what would happen when we have to take that money out and pay her tax, do we suddenly lose out or do we keep benefitting but just not as much ?

Cheers

S

 

[nickg]

Whilst your money is sat in the One account, you benefit because that money is offset against the amount you have borrowed on your mortgage - thus you pay interest on a lower amount.
When you draw the money out to pay the tax, you will be be accruing more interest, but you don't "lose out". You simply derive less benefit.
The offset mortgage is simply a way of pooling your resources, so when you have spare cash it reduces the interest you are charged.

 

[grasmere]

look at the First Direct account too, its a similar basis.

Mozzer, your last reply makes it sound complicated - hope this helps:

I dont have any 'savings accounts' at all (apart from shares etc)
ALL our money is with our current account mortgage, like this

Instead of eg a mortgage of £100,000 and a savings of £10,000 plus another account with £5,000 'tax' money in it ready for the tax man it is ALL with the current account so instead of having -£100,000 and +£15,000 in separate accounts we have -£85000 in the ONE mortgage account.

Regarding interest this is how it works:

Normally:
eg Mortgage of £100,000 costing 6% = eg -£500 per month
Savings of £15000 receiving NET interest of say 2%
(if you are lucky) +£25 per month income.
This is a balance of -£475 out every month (-£500+£25)

Now:
ONE account of -£85000 at 6% = -£425 out every month and thats it!!!!!

Difference of £50 to you EVERY MONTH

Simplistic - but this is EXACTLY the principle

 

[mark.t]

one account

6.2% variable...thats one of the bits of the one account i don't like....

 

[grasmere]

6.2% variable...thats one of the bits of the one account i don't like....

Agreed Mark however, the flexibility with this type of account is where the headline rate of eg 6.2% is not comparable directly with other less flexible accounts.

BUT, to make the most of the flexibility is where the discipline comes in - then it works in your favour.

 

[mark.t]

advert

in the advert for the one account the bit that makes me laugh is the women who says "she was able pay off her mortgage early because she dreamed of owning her own business".all that discipline to end up with more debt ....all she did was move the debt from her home to her business,brilliant advertising.

 

[grasmere]

"she was able pay off her mortgage early because she dreamed of owning her own business".

rubbish isnt it . . . and anyway, how exactly does 'dreaming of owning your own business' give you the 'ability' to pay off your mortgage early?

Mind you, its all about 'good' debt and 'bad' debt which is another tac . . .