Please or to access all these features

Add post

Watch this thread

Save thread

Start a new thread

Flip thread

Hide thread

My feed

Active Unanswered threads

Getting started FAQ's

Unanswered threads Acronyms Talk guidelines

Hide shortcut buttons

Talk

Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Flip

Original poster

One accounts- a good idea???

16 replies

milkysmum · 22/11/2010 22:20

Just looking for a bit of advice on 'one accounts'. Sounds a bit to good to be true- combine mortgage with current account, ability to overpay/ underpay flexibly. I work full time as a mental health nurse so have a reasonable steady wage. DH is a self employed bricklayer so money varies week to week. DD in nursery taking a large chunk of our income. Fixed rate with the halifax just ended so trying to decide what to do next. One account sounds like it would work for us but not sure? Anybody have one of these accounts and is it working for you?

OP posts:

MegBusset · 22/11/2010 22:22

Do you mean an offset account? We've got an offset mortgage with First Direct, it's fantastic (DH is self-employed too so has tax savings etc all offset against the mortgage). It's a big incentive to save money!

CornishKK · 22/11/2010 22:24

Have not looked at them for a while but a couple of years ago they were a good idea if you were genuinely going to over pay and were in control of your finances. If you are someone who is going to be tempted to keep taking money out against any equity in your home then don't do it.

Why not talk to an IFA, doesn't cost you anything?

Original poster

milkysmum · 22/11/2010 22:31

The one I've looked at is called a virgin one account but I think it is a type of offset account yes.

OP posts:

LornMowa · 23/11/2010 09:47

We have had one of those accounts for the last 10 years. Some people argue that the interest rate is high (Currently 3.75%) for our loan to value (mortgage of c£100000, house worth c£300000). For us there are advantgages. We can over/underpay at will. This was very useful when DH had large expense claims which weren't processed very quickly. We also make use of credit card stooging.(Sp?) At one point we had £20,000 on interest free credit cards (which temporarily reduced the size of our mortgage) with no worry about paying them off when the interest free period finished. While we probably could get a lower interest rate, the charges for transfering to another mortgage seem to be prohibitavely expensive so we don't bother.

I find the website for operating the account to be very clear and easy to use. If you and your partner are good at managing money and not tempted to eat into the equity on your house then it could be a good idea for you.

herhonesty · 23/11/2010 11:35

we've got an offset, same principle as virgin one. brilliant. havent looked back!

MUHAHAHADascheese · 23/11/2010 11:37

I had a virgin one account - found it great, excellent customer service as well by the way.

I would do it again - espcially now with DP who is very organised and would manage to get te best out of an offset account.

Milliways · 23/11/2010 18:46

We have a First Direct Offset Mortgage, and it has been a life-saver.

When DH was out of work we dropped payments to barest minimum. We overpaid in good years.

The downside to the Virgin "One" Account is keeping money separate for different things. EG, DH is self employed so his VAT & TAX is put in an account ready to pay once a year, but offsets the interest while we await the bill. We have a "holiday" account & "Uni fees" accounts, and can see at a glance exactly where we stand.

Also, I heard of a couple who received a lump sum into their Virgin account that put it overall into credit. Their account was shut & mortgage classed as paid-off! They could not re-draw it! That would have stuffed us with large tax bills etc. Also, they do not insist on interest being covered (you can pay it in & draw it back out again) so in theory could go years without reducing the Mortgage.

First Direct have given us no-end of help, and even wrote to say that we were "in balance" when a redundancy payment was made, as any extra "savings" would not earn interest. (Was ok though as that money was needed straight out again).

HTH

eviscerateyourmemory · 23/11/2010 18:53

We have a virgin one account, and it is brilliant. It was great being able to overpay, and the reduction in interest that comes with that.

For a while prior to our last house purchase we were in credit on the account and they didnt try to shut it of say that it was paid off, they just started paying us interest.

Each statement that you get tells you if you are behind or ahead of your plan, so you can keep track of how you are doing.

Original poster

milkysmum · 23/11/2010 21:04

Fantastic- thanks everyone for your comments. I think I'll seriously consider swapping to a one of these accounts soon!

OP posts:

RockChick1984 · 25/11/2010 15:04

Offset and one accounts are two very different products, I work in a bank and have dealt with both sorts. We no longer offer a one account to new customers, as it is basically just a large overdraft so none of your savings in there are covered by the financial services compensation scheme if your lender went bust. An offset account keeps your current account and savings separate from your mortgage, so usually is a much better arrangement. Best thing I can suggest is speak to a mortgage adviser about your own circumstances, however these mortgages really do help to repay your mortgage faster, I've seen a 20 yr mortgage paid off in 7 years without the customer feeling any extra financial strain. Xx

herhonesty · 25/11/2010 18:55

i think rockchick you are confusing one account with the virgin one account? which isnt sold through banks anyway.

LornMowa · 26/11/2010 09:18

RockChick, I don't really get the argument about the lack of protection of savings because by using a One Account (I think that is the new brand name of the Virgin One Account)you effectively don't have any savings - you just owe less money to the bank. If the bank failed the only downside would be that you would have to remortgage, possibily drawing some equity out of the house if you wanted access to some money.

eviscerateyourmemory · 26/11/2010 09:21

Or maybe if the bank failed my mortgage would vanish

LadyInPink · 26/11/2010 09:51

We have the Virgin One Account and we have never looked back. It is so easy to use and the bank statements have these graphs so you know how well you are doing and if you are in with a chance of paying mortgage off within the 25 years. We nearly paid ours off but then had an extension and there was no waiting for a credit loan at the bank. We could borrow as much as our mortgage is worth and pay as much or as little as we want. We are self employed and so some months we pay huge chunks off and others very little. I can't rate it enough!

Seriously look into it - correct me if i'm wrong but they don't offer it to everyone so if it's an option then be flattered.

Niceguy2 · 29/11/2010 09:34

My friend who is/was a mortgage adviser gave me some very sound advice. It all depends on how much you can get a normal mortgage for and how much savings you have to offset.

You may find that the interest you "save" is eaten up by the higher rate when compared to a lower traditional mortgage.

Strongly recommend you speak to a IFA before you commit to anything.

LunaticFringe · 29/11/2010 09:43

This reply has been deleted

Message withdrawn at poster's request.

Flip