Expired

Anyone on the ONE ACCOUNT mortgage shrinker thing?

63
Found 15th Oct 2008
Thinking of moving to it this year, anyone got any stories good or bad about it, seems recently it changed owners from virgin to RBS, how has that affected it, any input appreciated.

  1. Misc
  2. Mortgage
63 Comments

Banned

I have an off-set mortgage with the RBS, I don't like my payments going up and down though!

Original Poster

Not bothered about them going up or down as the aim is to overpay each month anyway

Banned

kungfu;3206477

Not bothered about them going up or down as the aim is to overpay each … Not bothered about them going up or down as the aim is to overpay each month anyway



Good luck, if you have plenty of cash, it is worth it!

Original Poster

DLM;3206504

Good luck, if you have plenty of cash, it is worth it!



Have decided i waste far too much on virtually nothing so am gonna use it to pay off mortgage, says on the site i could get it down from 21 years to just 6 years with the overpayments im planning, gonna do some research on it first tho, starting right here :thumbsup:

Banned

kungfu;3206524

Have decided i waste far too much on virtually nothing so am gonna use it … Have decided i waste far too much on virtually nothing so am gonna use it to pay off mortgage, says on the site i could get it down from 21 years to just 6 years with the overpayments im planning, gonna do some research on it first tho, starting right here :thumbsup:



I have had mine about 2 year's and it was fee free back then!

Ive been with them for 5 years now. Paid off £25.000 of a 125.000 mortgage. Currently 8000 ahead of repayment over 25 years. I love the way it works.
as far as im aware its always been linked with RBS as ive always used the brance (&natwest) to pay in cheques.
Its ideal if you are disciplined with your money.
DONT FORGET, RECOMMEND A FRIEND!!!!!!
(You & me £125 EACH!!) ;-)

Banned

Had a "smart mortgage" with First Direct for about 5 years. Think I've now got a balance of £800 left now! Is worthwhile if youve got the cash. I kept having to transfer money out though from the account I had it linked to - else you dont get paid interest on amounts above your loan. Its the only downside.

Original Poster

loulou;3206974

Ive been with them for 5 years now. Paid off £25.000 of a 125.000 … Ive been with them for 5 years now. Paid off £25.000 of a 125.000 mortgage. Currently 8000 ahead of repayment over 25 years. I love the way it works. as far as im aware its always been linked with RBS as ive always used the brance (&natwest) to pay in cheques.Its ideal if you are disciplined with your money.DONT FORGET, RECOMMEND A FRIEND!!!!!!(You & me £125 EACH!!) ;-)



interesting!! will be in touch if im going ahead :thumbsup:

These things may give you the interest off your mortgage but you won't be earning interest on it as you would normally so in effect you're not really any better off. In fact I would go so far as to say the rate is usually higher than other mortgages so you're losing out.

Example:

£100,000 mortgage at 5% costing £5,000 per year.

£100,000 offset mortgage at 5.5% per year, with £5,000 savings costing £5,225 per year.

So if the offset mortgage is more by lets say 0.5% then you'd need £10k more in savings in order to break even. But obviously if you had that £10k you'd be earning interest in an ISA for example.

yeah but with 10k in savings youd be paying interest on a £90.000 mortgage.

loulou;3214619

yeah but with 10k in savings youd be paying interest on a £90.000 … yeah but with 10k in savings youd be paying interest on a £90.000 mortgage.



I worked it out including that.

If you had 10K savings then you're either paying interest on 90k and earning no interest on the 10k, or you're paying interest on 100k and earning interest on the 10k.

Either way you're usually better off with the cheapest rate, which is not an offset mortgage.

Original Poster

Benjimoron;3209125

These things may give you the interest off your mortgage but you won't be … These things may give you the interest off your mortgage but you won't be earning interest on it as you would normally so in effect you're not really any better off. In fact I would go so far as to say the rate is usually higher than other mortgages so you're losing out.Example:£100,000 mortgage at 5% costing £5,000 per year.£100,000 offset mortgage at 5.5% per year, with £5,000 savings costing £5,225 per year.So if the offset mortgage is more by lets say 0.5% then you'd need £10k more in savings in order to break even. But obviously if you had that £10k you'd be earning interest in an ISA for example.



yeah but im not talking about savings, im talking about leaving most of my wage in there each week instead if blowing it on gadgets and nonsense

kungfu;3218472

yeah but im not talking about savings, im talking about leaving most of … yeah but im not talking about savings, im talking about leaving most of my wage in there each week instead if blowing it on gadgets and nonsense



So you want to pay an extra 0.5% on £100k for example in order to save 5.5% on 1k???

Crazy!


Also just because it's in your current account doesn't mean it's not earning interest, 5% at A&L for example.

One account rate: 6.7%

HSBC rate: 6.25%

So you're paying 0.45% extra on the whole balance in order to make a rather small saving. Which probably doesn't exist anyway as you should be earning at least 5% on that money anyway.

Can anyone give a scenario where you would actually be better off going with a one account???

They're also a bit economical with their comparisons:

According to them the typical savings rate in the UK is 3.4%, whilst that maybe the average of the accounts available no-one should ever go for that sort of rate.

Banned

Benjimoron;3218599

They're also a bit economical with their comparisons:According to them … They're also a bit economical with their comparisons:According to them the typical savings rate in the UK is 3.4%, whilst that maybe the average of the accounts available no-one should ever go for that sort of rate.



Can someone work it out properly please, I'm considering doing this also :thumbsup: come on mathematicians of the world do your stuff :thumbsup: ... please

lumoruk;3218764

Can someone work it out properly please, I'm considering doing this also … Can someone work it out properly please, I'm considering doing this also :thumbsup: come on mathematicians of the world do your stuff :thumbsup: ... please


errr, I did???
Benjimoron;3209125

These things may give you the interest off your mortgage but you won't be … These things may give you the interest off your mortgage but you won't be earning interest on it as you would normally so in effect you're not really any better off. In fact I would go so far as to say the rate is usually higher than other mortgages so you're losing out.Example:£100,000 mortgage at 5% costing £5,000 per year.£100,000 offset mortgage at 5.5% per year, with £5,000 savings costing £5,225 per year.So if the offset mortgage is more by lets say 0.5% then you'd need £10k more in savings in order to break even. But obviously if you had that £10k you'd be earning interest in an ISA for example.

Benjimoron;3218562

One account rate: 6.7%HSBC rate: 6.25%So you're paying 0.45% extra on the … One account rate: 6.7%HSBC rate: 6.25%So you're paying 0.45% extra on the whole balance in order to make a rather small saving. Which probably doesn't exist anyway as you should be earning at least 5% on that money anyway.



Think that sums it up anyway???

Banned

Benjimoron;3218571

Can anyone give a scenario where you would actually be better off going … Can anyone give a scenario where you would actually be better off going with a one account???



I want to change my mortgage but the bank won't borrow me any money because i'm unemployed at the moment :-(

DLM;3218795

I want to change my mortgage but the bank won't borrow me any money … I want to change my mortgage but the bank won't borrow me any money because i'm unemployed at the moment :-(



You want to change to the one account?

I doubt any bank would lend money to someone unemployed.

Banned

Benjimoron;3218809

You want to change to the one account?I doubt any bank would lend money … You want to change to the one account?I doubt any bank would lend money to someone unemployed.



No i want to change from my off-set, as i said earlier, i don't like my payments going up and down! :roll:

Original Poster

Benjimoron;3218525

So you want to pay an extra 0.5% on £100k for example in order to save … So you want to pay an extra 0.5% on £100k for example in order to save 5.5% on 1k???Crazy!Also just because it's in your current account doesn't mean it's not earning interest, 5% at A&L for example.



i get paid weekly, withdraw all the excess in cash then blow it so no interest comes into it, just wondering why you think its its crazy if it says i can pay my current mortgage off in 6 years instead of 21??? On a normal variable rate i know you can over pay on it but lets be honest if the cash is in our hands and we are shopping we are going to spend it rather than think oh i will pay some mortgage off. Was thinking with the one account it would already be gone and paid off before i get my mitts on it.


Benjimoron;3218571

Can anyone give a scenario where you would actually be better off going … Can anyone give a scenario where you would actually be better off going with a one account???



How about when after 6 years of sacrifice and overpayments im mortgage free and minted up to the eyeballs? :thumbsup:

kungfu;3219751

i get paid weekly, withdraw all the excess in cash then blow it so no … i get paid weekly, withdraw all the excess in cash then blow it so no interest comes into it, just wondering why you think its its crazy if it says i can pay my current mortgage off in 6 years instead of 21??? On a normal variable rate i know you can over pay on it but lets be honest if the cash is in our hands and we are shopping we are going to spend it rather than think oh i will pay some mortgage off. Was thinking with the one account it would already be gone and paid off before i get my mitts on it.How about when after 6 years of sacrifice and overpayments im mortgage free and minted up to the eyeballs? :thumbsup:





It doesn't work quite how you think it does, it's basically just a current account that instead of earning interest, decreases the interest on your mortgage. This is of course a great idea, saves paying tax. The only problem is that their rate isn't as good as you could get if you went elsewhere.

Quite simply the one mortgage will cost you more. If you decide to overpay and pay it off quicker then that's great, but you'd still be better off doing the same thing but with a different mortgage.

If you're looking for something to help you be more disciplined in putting money aside then look at a regular saver account. This mortgage won't help you be any more disciplined.

Where does it say you can pay off your mortgage in 6 years rather than 21? I'd like to see the figures behind that as it doesn't really make sense. If you are overpaying then you can pay it off early but that's because you're overpaying, not because you've got a one mortgage.

I'll try to give an example in a minute which might make more sense.

Benjimoron;3209125

These things may give you the interest off your mortgage but you won't be … These things may give you the interest off your mortgage but you won't be earning interest on it as you would normally so in effect you're not really any better off. In fact I would go so far as to say the rate is usually higher than other mortgages so you're losing out.Example:£100,000 mortgage at 5% costing £5,000 per year.£100,000 offset mortgage at 5.5% per year, with £5,000 savings costing £5,225 per year.So if the offset mortgage is more by lets say 0.5% then you'd need £10k more in savings in order to break even. But obviously if you had that £10k you'd be earning interest in an ISA for example.



Actually, this example is fine.

Can you not see that the one mortgage would cost you an extra £225 per year on a £100k mortgage, even if you magically had £5k sitting in your current account which wasn't earning interest but now is saving you interest. (You shouldn't be in a situation where you have £5k earning no interest, you should be getting at least 5% on it anyway).

So quite simply, in a direct comparison (if we use £5k in both examples rather than just the one mortgage) you'd be paying an extra £500 a year on a £100k mortgage with the one mortgage.

So instead of getting the one mortgage, just get a savings account or overpay your current mortgage, which ever will give you the best rate on your money after tax. Doing this will save you £500 a year over the one mortgage.

kungfu;3219751

i get paid weekly, withdraw all the excess in cash then blow it so no … i get paid weekly, withdraw all the excess in cash then blow it so no interest comes into it,:



So how would the one mortgage help you with that? You'd not be offsetting anything against your mortgage! The one account simply stops you paying interest on your mortgage rather than giving you interest on your balance. It equates to roughly the same amount. Therefore if the rate of the mortgage is about the same then go for it, if it's slightly higher (it's actually quite a bit higher) then forget about it.


"just wondering why you think its its crazy if it says i can pay my current mortgage off in 6 years instead of 21???"

They're probably comparing their rate against some stupidly high rate than no-one should ever go for. Or they're assuming that you have £20k sitting in your current account currently earning no interest (which you would be crazy to be doing!)

"On a normal variable rate i know you can over pay on it but lets be honest if the cash is in our hands and we are shopping we are going to spend it rather than think oh i will pay some mortgage off."

The one mortgage won't make any difference, if you're going to take the money out and spend it then you'll still do it, if you want to overpay then you can currently do that anyway, either by overpaying or putting it in a savings account.

"Was thinking with the one account it would already be gone and paid off before i get my mitts on it."

It's not already gone, it's in your current account like normal. If you want to overpay then overpay rather than spending the money, this is about self discipline, the one account won't do that for you.

"How about when after 6 years of sacrifice and overpayments im mortgage free and minted up to the eyeballs? :thumbsup"

Not going to happen I'm afraid buddy, this is certainly no easy way to make money, it will cost you money.

Ok, from a spreadsheet I just created...

If you have a £100K mortgage at 5% over 25 years and £5K savings at 5% over 25 years. You pay £584.59 a month on the mortgage so £175,377.01 overall. In the same time the compound interest on the savings is £8,568.83 (after tax). The total cost is £161,808.19 (as you still have the 5K).

If you have a £100K mortgage at 5.5% over 25 years offset with £5K savings. Then your standard repayment (without taking the offsetting into account) is £614.09. You pay off the mortgage (well, the balance drops below £5K) in 270 payments, so a total cost of £165,803.62.

In this case offsetting is marginally more expensive, although you do repay 2.5 years early.

If anyone wants any more examples please let me know. :thumbsup:

Ps. I have an offset tracker mortgage (0.75 over BOE base) with Barclays

Original Poster

Benjimoron;3221572

"How about when after 6 years of sacrifice and overpayments im mortgage … "How about when after 6 years of sacrifice and overpayments im mortgage free and minted up to the eyeballs? :thumbsup"Not going to happen I'm afraid buddy, this is certainly no easy way to make money, it will cost you money.



I dont get how it couldnt happen? if i overpaid like mad for 6 years at a rate it was telling me would pay off my mortgage in that length of time....................... then how can that not happen? :?

I dont get why you are quoting a set figure like 5k as if thats the only overpayment thats gonna happen, im talking about consistently overpaying every single week with every penny i can for years and years.

Banned

kungfu;3222306

I dont get why you are quoting a set figure like 5k as if thats the only … I dont get why you are quoting a set figure like 5k as if thats the only overpayment thats gonna happen, im talking about consistently overpaying every single week with every penny i can for years and years.



Agreed. There are several things that are being ignored.

The interest lost in your savings - would also not be taxed.
The over payments you are making will be compounded , reducing the overall debt through each over payment.
You will have a big pot of money you can dip on whenever you see fit - without inflated loan charges.
Your current account can be linked. Know of any that pay out huge amounts to you in interest?

Like I said above, I have £800 left on mine - after transferring out of an endowment mortgage in 2003. Best thing I ever did.

kungfu;3222306

I dont get how it couldnt happen? if i overpaid like mad for 6 years at a … I dont get how it couldnt happen? if i overpaid like mad for 6 years at a rate it was telling me would pay off my mortgage in that length of time....................... then how can that not happen? :?I dont get why you are quoting a set figure like 5k as if thats the only overpayment thats gonna happen, im talking about consistently overpaying every single week with every penny i can for years and years.



Like I explained, overpaying will pay off your mortgage more quickly and cheaper. Having an offset mortgage will not. They are two different things.

You can overpay (or put into savings for the same effect) any mortgage, it doesn't have to be an offset one.

My figure of £5k is an extreme example of a current account balance, I was being very generous. It's likely that the offset amount would be much smaller so the offset would end up even more expensive.

You are getting overpaying and offsetting confused here.

Banned

Benjimoron;3222807

You are getting overpaying and offsetting confused here.



Im not sure he is.

You seem to be ignoring the flexibility it brings and also the working capital in your current account. On top of that, what regular savings account gives you anywhere near the mortgage interest rate - particularly taking into account the tax you pay on interest earnt.

My current account never goes below £5K. How much interest does that earn in my current account? How much will that help towards your "normal" mortgage?

guv;3222652

Agreed. There are several things that are being ignored. The interest … Agreed. There are several things that are being ignored. The interest lost in your savings - would also not be taxed.The over payments you are making will be compounded , reducing the overall debt through each over payment.You will have a big pot of money you can dip on whenever you see fit - without inflated loan charges.Your current account can be linked. Know of any that pay out huge amounts to you in interest?Like I said above, I have £800 left on mine - after transferring out of an endowment mortgage in 2003. Best thing I ever did.



I think you'll find tax was mentioned by me and ayrshirebacon. It will make such a little difference to not really be worth calculating. Give us some figures if you think it'll make a difference.

Work out the total costs of both as ayrshirebacon has done.


"The over payments you are making will be compounded , reducing the overall debt through each over payment"

The same whether it's an offset or traditional mortgage, therefore no need to calculate.

"You will have a big pot of money you can dip on whenever you see fit - without inflated loan charges."

True, but if you put into savings rather than overpaid as I described you would too.

"Your current account can be linked. Know of any that pay out huge amounts to you in interest?"

A&L pay 5%, and we're talking about a a few percent on a small amount of money. The fact that the mortgage is more expensive far outweighs it.

Like I say, do the calculation and post the figures.

I fail to see what leaving £800 on there is doing for you?

Do the calculation and post your findings...

It was a good deal a few years ago when we had ours because the interest earned on savings was terrible. Things have picked up for savers now. There is also the assumption that someone has 'savings' but it is possible to save a lot on mortgage interest by 'borrowing' money, namely stoozing on credit cards with 0% interst rates. But like someone said, you have to manage your money well. We saved around 12 K on ours in interest payments.

At the end of the day do what you want, if you go for it then it'll cost you more money as I and bacon have proven with our figures.

If anyone wants to post some figures to prove otherwise then please do?

guv;3222884

Im not sure he is.You seem to be ignoring the flexibility it brings and … Im not sure he is.You seem to be ignoring the flexibility it brings and also the working capital in your current account. On top of that, what regular savings account gives you anywhere near the mortgage interest rate - particularly taking into account the tax you pay on interest earnt.My current account never goes below £5K. How much interest does that earn in my current account? How much will that help towards your "normal" mortgage?



Lots of savings account give very close to the point where it's irellevant the difference. ISA's or kids accounts avoid tax. Even with tax the saving is far outweighed by the fact the mortgage itself is alot more expensive.

You're probably not using the £5k in your current account effectively, put it in a savings account to get some proper interest.

Give us some calculations then if you want to be believed guv.

Banned

"The over payments you are making will be compounded , reducing the … "The over payments you are making will be compounded , reducing the overall debt through each over payment"The same whether it's an offset or traditional mortgage, therefore no need to calculate.



So do you think that every spare penny you have would always be saved in an account that is accessible anytime you like without penalty at the highest rates? My situation is slightly different - I dont have worry about maximising things, but I certainly value the flexibility.

"You will have a big pot of money you can dip on whenever you see fit - … "You will have a big pot of money you can dip on whenever you see fit - without inflated loan charges."True, but if you put into savings rather than overpaid as I described you would too.



?? Are you suggesting money paid into you mortgage can be taken back? My original loan was £64K. I could make a call and deposit £64K (less the £800 I still owe)

"Your current account can be linked. Know of any that pay out huge … "Your current account can be linked. Know of any that pay out huge amounts to you in interest?"A&L pay 5%, and we're talking about a a few percent on a small amount of money. The fact that the mortgage is more expensive far outweighs it.



A&L pays 5% on current accounts?

Like I say, do the calculation and post the figures.I fail to see what … Like I say, do the calculation and post the figures.I fail to see what leaving £800 on there is doing for you?



Eh? Sorry, what's your point? Are you suggesting I should transfer money out of the mortgage account? Why would I need to do that? Or that I should just pay the money off and incur deed charges (which they are kindly doing for free with the aid of the linked account.) Yes I could pay that debt off (Since I have savings with over £50K in them, it wouldn't be difficult. Just don't see the point. Like Ive said several times, my situation is slightly different in that my mortgage has effectively ended. However the method to get to this stage has proved very useful.

As for posting calculations, what's the point? I use First Direct for all my banking. I know the interest rates they charge for my mortgage is higher than any savings account. Or are you implying we should all take out mortgages and use the money to earn more by lending it back to them? If thats what they do, no wonder they are in trouble!!!!

Its ironic. Before I transfered my mortgage, I had ISAs. I was "advised" to take out share ISAs as I could increase my return and my cash ISA was full and could get better than my savings accounts. I did this and lost £2K of the £5K I invested in 18 months. An ofset mortgage could have saved my a annoying loss!

Dont forget the oneaccount interest rates are dependant upon the equity you have in your house. The more you 'own' the lower the rate.
Also, how you spend the money each month. Leave direct debits till end of month, therefore your wages stay in longer on a daily basis so reduce the amount you owe & therefore pay interest on.
Also, i like it because you only 'pay' the interest - the rest reduces your balance.
ie: a traditional 125,000 mortgage may cost around £700 + per month, but we only pay say £500 and leave £200 in reduce balance. (figures just estimated based on what we pay).

Full reply to come tomorrow as I'm on the mobile. Suffice to say that no-one's been able to come up with any figures to disprove that the offset account doesn't work out cost effective.

You haven't read most of what I've written guv, savings rather than overpaying for a start!

What are these deed charges you talk about? I doubt it makes any difference to kungfu?

Anyone care to post their calculations that the one account is better than a traditional mortgage? I doubt anyone can which is probably why you haven't guv.

also, bear in mind:
100,000 mortgage/facility at 5.5% - cant say it will cost £5500 per year
As on pay day - say £2000 paid in, interest only charged in 98K. This doesnt all leave your account in one hit so lower interest charges due to reduced balance.
Say only spend £1800 that month, reduced mortgage by £200, so next month owe £99.800.
Same cycle.
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