One account mortgages

[Gucci]

Just a thought - this has been going for years now, but little seems to be said about the idea. I guess most people know, but the idea is everything comes out of one single account. Interest is reduced on your mortgage balance as any other income such as salary or bonuses counteract some of that interest. I tapped in some notional figures and it reduced my mortgage interest by a big margin.

What are thoughts here? My mortgage is up for review in September - anyone else gone down the "one" route?

 

[Mudster]

It makes financial sense, however many people (my OH included) can't handle seeing a big negative figure in a bank account. She needs it all nice and compartmentalised.

 

[Dryce]

What are thoughts here? My mortgage is up for review in September - anyone else gone down the "one" route?

My own preference is for a separate offset. I like to keep distinct and separate liquidity in the offset account.

Also mortgage rates are low. If you're single account is at close to base rate then you may do better if you can get a separate savings account that pays a more competitive rate of interest at the moment - you may well do better even after tax.

 

[vijilants]

Ive had an offset for years. Basically any cash you have in the account is offset against the balance on the mortgage, so you only pay interest on the the remainder.

They work very well if you have some cash floating around. You obviously don't get interest on the cash because it is offset against the mortgage, but you don't pay tax on the savings.

 

[kth286]

Having worked in the industry I would make comments as follows:-

1. check that the interest charged is competitive with other types of mortgage as very often it is higher and therfore negates the benefits.

2. a great many people do not like all their money in one account and like to see it compartmentalised as mentioned by previous posters.

3. Do think about the situatoion if you fall out with your lender/do not stick to the terms of the contract due to circumstances beyond your control - all your eggs in one basket and all that.

4. BUt if you are a saver there are financial/tax advantages.

5. There are alternative offset deals where you can have seperate pots.

 

[Bobby Dazzler]

I've had offset mortgages for years now, and they offer you the benefits of a One-style single account, with the benefits of having separate motgage, current, savings, and long term savings accounts - albeit pyschological.

I looked at One a few times, but each time the rate wasn't that great. That may have changed, but worth comparing with some offset arrangements.