Finance Choices
The One Account Mortgage
Who are One Account?
The One Account is part of the Royal Bank of Scotland Group, one of Europe's leading financial services groups and they've got the benefit of nearly 300 years' experience in helping customers find better ways to manage their money. And they'll continue to build on this in the future - you can bank on it.
About The One Account Mortgage
The One account puts all your money in one place - your mortgage, loans, savings and current account. Some of the benefits include:
The One account applies the same good value interest rate to all your finances, so there's no need to pay sky-high rates on loans and cards, or search far and wide for a savings or current account giving you decent return on your money.
The typical One account interest rate is 5.95%. The overall cost for comparison is 6.2% APR.
Applying for The One Account Mortgage
To open a One account, you need to:
The more you review the One Account Mortgage the more you begin to find yourself getting very excited about this offer and starting to feel the urge to apply now.
For more information visit the One Account website
The One Account is part of the Royal Bank of Scotland Group, one of Europe's leading financial services groups and they've got the benefit of nearly 300 years' experience in helping customers find better ways to manage their money. And they'll continue to build on this in the future - you can bank on it.
About The One Account Mortgage
The One account puts all your money in one place - your mortgage, loans, savings and current account. Some of the benefits include:
- Repay your mortgage early and save money - Repay your mortgage early and save money, giving you more time and more cash to spend on what you really enjoy.
- Get a better return on your savings - with no tax to pay - By paying your savings into the One account you can use them to reduce your mortgage and save interest on a daily basis. And because it's interest saved rather than interest earned, there's no tax to pay.
- Cut the overall cost of your mortgage - The money in your current account automatically reduces what you owe on your mortgage, saving you interest. This can add up to thousands over the lifetime of your mortgage.
- Cut the cost of your personal loans and credit cards - You pay one mortgage-style interest rate for everything you borrow - no need for expensive loans and credit cards.
The One account applies the same good value interest rate to all your finances, so there's no need to pay sky-high rates on loans and cards, or search far and wide for a savings or current account giving you decent return on your money.
The typical One account interest rate is 5.95%. The overall cost for comparison is 6.2% APR.
Applying for The One Account Mortgage
To open a One account, you need to:
- be aged 18 or over.
- be a UK resident and more than 5 years away from retirement.
- own (or be about to buy) a property in England, Scotland or
- agree a borrowing limit of £30,000 or more.
- be happy to repay your borrowings by an agreed date - which will always be before your retirement.
The more you review the One Account Mortgage the more you begin to find yourself getting very excited about this offer and starting to feel the urge to apply now.
For more information visit the One Account website
posted by Barbara Gordon at 3:16 PM
The One Account Mortgage
10 Comments:
While I agree with consumer groups and government lobby groups that the financial services industry needs to learn a few lessons about responsible lending, I would suggest that, ultimately, it is still the consumer who has to sign on the dotted line whenever he( not being sexist!!) wants to borrow money. In essence, let us think about not onlyu the short term situation but the whole picture.
Of late, we have been reading in the papers of how people commited suicide due to excessive borrowing, this is saddening but where are we going wrong as a nation?
Not only do people need to think carefully before borrowing or buying on credit, they also need to seek good, impartial advice when they are struggling with debt.
I have tried to summarise what I think is a "checklist" of deciding how much to borrow and if followed it should minimise the above situations or perhaps even avoidt hem?
1. Can you really afford it?
It's a sensible question, of course, and one that people should consider more seriously. Often, we only think about short-term affordability. We may feel that that we can make repayments this month and next month and the month after, but how sure are we that we'll still be in a position to do so this time next year? We assume we're not going to lose our jobs, fall ill, or get divorced, and that nothing will stop us from being able to repay what we've borrowed. Besides, we obviously want that new kitchen or holiday or car now, so we go for it anyway. Is it the right decision, though?
2.Read the small print before signing
Aaaargh! We can't think of anything more tedious than trying to decipher the small print, but it has to be done. If something's not clear, ask! How many people do you know who see the error of their ways, try to switch to better deals, only to discover that they've got to stump up a hefty redemption penalty? Don't be one of them - read the details before you sign in the first place.
3.Check how much you'll pay back over the length of the loan
This is another thing people often ignore. If you borrow £1,000 on instant credit at an APR of 25% over five years, you'll pay £675 in interest for the privilege. How much do you really want that widescreen TV? Do you really need it right now, or could you save up for it? What's so wrong with your current television set, anyway?
4.Watch out for optional extras, especially payment protection insurance (PPI)
This is a particular favourite with lenders. Often, their application forms require us to tick a box if we don't want payment protection insurance. Since many of us don't bother to read the small print, it's possible to get lumbered with paying extra for something that we probably don't even need. You don't need PPI or won't be covered fully if you're: self-employed, on a short-term contract, have savings that could cover the monthly repayments temporarily, or have any other income protection policy.
6.Beware of loans secured on your home ? you could lose it!
Sometimes, there are good reasons for releasing some of the equity in your home, but you need to think long and hard about borrowing money against the roof over your head. If it's for something that will add value, such as a new kitchen or a loft conversion, then a secured loan or bigger mortgage may be worth considering. But are you sure that you want to risk your home, just so you can enjoy a luxury holiday that you'll barely remember by the time you've paid off the loan at the end of the mortgage term?
And finally...
If you're intending to borrow money, make sure you do it for the right reasons - and think about the tips above. Don't overextend yourself and, if you think you may already have, contact the Consumer Credit Counselling Service which will help you to sort out your finances for free.
The One Account isn't really just a mortgage - it could be a complete financial solution to all your day-to-day savings and borrowing needs.
The One Account is where savings and mortgage borrowings are linked together or "offset" against each other. This means that you pay less interest on your mortgage, thus helping you to repay your mortgage faster and more cheaply in the long term!
Do give the One Account some serious thought but you could benefit by doing some legwork first.
For the third year running, the One account, owned by the Royal Bank of Scotland and formerly branded Virgin One, has scooped the award for best mortgage provider.
The One account, a pioneer of the new breed of current account mortgages, has built up 103,000 customers and £5.8bn of committed customer borrowing facilities since its launch in 1987.
Managing director Jayne-Anne Gadhia says: "Word of mouth is the key to our success. Nowadays, customers are demanding much more than just 'good' service, and won't recommend a company offering only that. Consumers want great service and that is what we aim to deliver at the One account, each and every time we speak to customers. As we continue to grow, we are committed to sustaining this approach and continue to help people plan for the unexpected, cope with the unexpected and do the unexpected."
The workings of the innovative 'all-in-one banking' account, which can be applied for and run by phone, via the internet or through intermediaries, are well publicised. By borrowing and saving through the same account, you can cut your interest bill because any money that goes in - be it savings or monthly income, immediately reduces what you owe on your mortgage and loans. Interest is calculated daily, so you are only charged interest on what you owe at the end of each day. You only pay a mortgage-style interest rate (currently between 4.85% and 5.7% depending on the size of your mortgage in relation to the value of your home) for all borrowings, no matter what you use the money for. Meanwhile you are effectively earning tax-free interest at the mortgage rate on your savings and any spare cash that would normally be earning next to nothing in a current account.
The company claims that eight out of 10 households with combined borrowings of £50,000 or more would be better off with a current account mortgage than with a traditional suite of products, even if they maintained exactly the same spending habits. The account provides best value to people who aim to pay off their mortgage early and nearly 90% of its customers are currently ahead of their repayment plans.
It concedes, however, that some groups, such as people with small savings on a relatively low, steady income, will not reap such financial benefits from the One account and may be better off shopping around for 'best buy' conventional products.
All well and good - but given the recent proliferation of similar products, some with lower interest rates, which let you offset savings against borrowings, how has the One account managed to retain its winning position? The runner-up for this year's award, First Direct's Smartmortgage, for example, is a flexible, offset mortgage which pays and charges a market-leading rate of just 4.6% on all monies in a customer's various borrowing and savings pots. Why didn't it win?
The answer, says spokesman James Duffell, is that the One offers "ultimate flexibility" combined with "unparalleled customer service".
"We believe the One account is the most flexible financial product available on the market," he says. "It allows overpayments, underpayments, payment breaks and drawdowns, often without any prior authorisation. It also allows customers to view and manage their finances in a way that suits them - either as one account or as lots of individual pots - yet still keeps the underlying flexibility of one single account."
Janine Wardle, a self-employed dentist from Cheltenham, took out a One account mortgage in 1998. Since then, she says, "I've made the most of its flexibility and saved myself a small fortune too".
After regularly remortgaging to get the best rate, Ms Wardle calculated she'd be better off with a new current account mortgage. She wanted the flexibility to overpay without penalty whenever possible, but also to borrow back when necessary to suit her fluctuating income as a dentist. She plumped for a One account on a rate of 4.85% with a facility allowing her to borrow up to 75% of the value of her home. The plan has paid off and she is currently ahead of her repayment schedule by £8,000.
She has also made good use of the payment break and drawdown facilities. "The account has given me the flexibility to take a recent three-month sabbatical during which I learnt to fly light aircraft, for example," she says. "And at a time when I was temporarily out of work and my car packed up, it meant I could simply buy a new car instead of throwing good money after bad repairing the old one. I definitely made the right choice taking a One account."
I have two seperate mortgage accounts on my house. First one is approx 38,000 (30,000 remaining with 11 yrs) and the second one 15,000 (recent for house improvement). Both are capital and interest.
I want to consolidate my mortgage but cannot work out the right one.
Say 45,000 over 15yrs with capital and interest payment. The thing I could not understand about the ONE ACCOUNT MORTGAGE was being able to pay it off early. I can save 100 a month.
You can pay your mortgage off early with any lender that allows overpayments, and proably get a better rate.
The only benefit to the one account is that you can offset any savings you may have - do you have any savings that you can offset?
Also by having your salarry being paid into the same account, whilst it is sitting in your account before being used to pay bills etc, it is also offseting the mortgage interest.
A lot of people that I speak to do not like combining all their banking/mortgage into the same account as it gets very confusing for them to distinguish all their transactions.
Only you can decide - however if you are looking at overpaying, you will find a lower rate elsewhere on a discount/tracker
The big benefit to the One Account - and potentially the big drawback - is that it's totally flexible.
Sure, with a more conventional flexible mortgage you can choose to overpay or extend your borrowing, but that involves thinking about doing it, contacting the bank etc. With a One Account, it's all treated as your current account - want to buy a new car next week, then you can just do it using Switch/Maestro and your mortgage goes up automatically. That's great if you want flexibility, but dangerous if you've no self control.
The flexibility does allow you to "play the system" somewhat. I make a point of buying as many things on credit cards as possible : this means that although I pay them off in full, the interest free period (6 weeks) isn't just interest free, it's saving me 5% on my mortgage. It also makes sense to schedule all direct debits right at the end of the month so you get the benefit of that money paying down your mortgage. If you claim expenses from work, it pays to consider when you put the claim in versus when you actually have to settle it...again, 5% return for the period.
So, don't be fooled into thinking that it's only savings that offset the debt...
I've no doubt that it's possible to get a better rate of return by going for discounted rates, but that involves remembering to churn your mortgage when it expires, plus the potential transaction costs (setup, survey etc) of doing so...not worth the hassle for me.
Having a One Account also focusses the mind on investments : whatever investment you see, if it can't return 5% post tax, then you're better leaving the money in the bank to pay down the mortgage.
You should note that the One Account has (at least for the 5 years I've had one) been defacto a tracker...whenever Bo E interest rates change (up or down), the One Account rate has changed at 18:00 the same day, without fail. No contractual commitment, but that's the way its always worked so far.
I think the comments about confusion factor on current account mortgages are valid. However, if you work out how much you should owe on your mortgage each month (a reasonably simple calculation), it's then possible to work out where you are : e.g. you should owe £50k, you actually owe £49K, that's the equivalent of saying you've got £1k in the bank. To help you, if you tell the bank your plans, they'll tell you how much you should owe on each monthly statement.
I've found the One Account a fantastic product, but it's not for everyone. What I'd say is take the time to read up on it...if you've any doubts after that, I'd say leave it alone : it's VERY easy to get yourself in trouble.
One bonus....should you ever get a 'shoulder surfer' at a cashpoint, make a point of getting an on screen balance. It's pretty easy to tell that people are snooping from their reaction when they see a balance of £80k overdraft! (on some machines, it's even better - the 'Debit' bit falls onto another line so it looks like you're £80K in credit...)
My wife and I have had a "Virgin" One Account for about 6 or 7 years now, and it's been absolutely fantastic!
OK, it surely doesn't have the best intrerest rate, but in terms of the flexibility and simplicity that it offers, I'm sure that it can't be beaten.
Assuming that the initial deal is the same as we got, then they value your property and, subject to your income, they agree a maximum limit that you can borrow up to at any time - without asking.
So, for example, if you have a house worth £200,000 then they may allow you to borrow upto say £150,000. Your existing mortgage may be only £125,000 and you may be lucky enough to have savings banked elsewhere at say £25,000.
So, you open a One Account, transfer your existing £125K mortgage and £25K savings into it and, hey presto, you now pay interest on just £100K at the agreed rate. OK, so you lose the saving interest, but that was a poorer rate than your mortgage rate anyway, and you got taxed on it. Technically you are now getting a higher, tax free, rate on it - difficult to explain?
Basically, your saving are helping to keep the mortgage interest low - but you can get at them whenever you like.
If you want to pop over to Bulgaria and buy a small town, you just write out a cheque, and as long as that doesn't go over your agreed limit (£150K) then nobody cares!
We used some of our allowable credit to fund deposits on Buy-To-Let flats, which we now rent out and take an income from :-)
If you get any 0% (or lower than the One Account interest rate) credit card balance transfer offers, the grab them quick. Stuff all the free (or pretty cheap) cash into the One Account to knock your mortgage down a bit for 6months or whaever the offer period is, then pay it straight back to the card again - saving £100's of interest along the way. It's great!
The only stipulation we got when we opened the account was that the mortgage had to be paid off by the time that we retire (65?), but there are no monthly payment/repayment requirements at all, you don't need any endowment, but probably need life cover though.
We have a one account too, have had one for the past 6.5 years, absolutely fantastic, we wouldn't change it for the world. I echo everything said above, also the call centre always answers the phone immediately and are always very helpful. When we wanted to change to a repayment mortgage and change our facility amount recently it was all done over the phone and took about 5 minutes. Their service is second to none.
You can also use any cash point machines without charge.
Once you have one of these accounts you'll never want anything else.
My husband and I have had a one account for the past two years. It particularly suits us as we are self employed and therefore pay tax in arrears, thus whilst we are saving for the next tax bill the interest we have to pay on the mortgage is greatly reduced.
It is a excellent financial resource as the 'not having to pay the tax' is certainly the highlight of the program. It just goes to show that reading a good document like this online pays off if you do your money homework! Great Stuff!
B. http://loan.valueprep.com
Post a Comment
<< Home