I'm considering changing my mortgage to one of those thats is a mortgage/savings/current account all in one as it seems that I can save a load of money. I'm worried that they are 'too good to be true'. Does anyone have any experience of these types of mortgage? are their any pitfalls that I need to be aware of?

I have an 'openplan' mortgage with the Woolwich, they were the best out of the three which were on offer 4 years ago ie Virgin One account and Intelligent Finance.

It's only viable if you have a substantial amount to 'offset' against the mortgage also the mortgage rate can be slightly higher. I have found it works great for us and am paying off far faster that I'dve hoped for. However we'll have to change soon as we're going to need the cash to extend and it won't be worth it :(

The best tip is to put absolutley everything on a credit card each month and pay off all the balance the month later (so as not to incur interest) preferably a card that gives you points so you're offsetting any balance for as long as possible. The fact is when you're paid monthly that will sit there until you spend it so every penny is worth keeping in the bank as it's offsetting any interest. Last month I only paid £22.00 interest all the remaining payment went straight off the capital.

Try not to switch anything and only draw out cash as and when needed, you also have to be organised with your finances. Try to arrange direct debits at the end of the month, every penny in there helps honest.

If you're organised I can't think of any downside other than the rate may be slightly higher than a discounted mortgage and of course you need savings to offset.

I like having all the 'pots' to move money around in it gives you greater control and it's very rewarding seeing that interest you're saving. In effect you're getting the same amount of interest on your savings as your mortgage rate, it's just that it comes straight off the mortgage and you don't get any interest added to your savings.

Shop around and get the best deal but there aren't that many offset mortgages on offer, try and get one where there are little or free arrangement fees (bit hard these days) check out the Woolwich though.

Any questions you can PM me, hope this has helped as mortgages can be a minefield so know your product!

Thanks Twitcher. The idea about the credit card sounds genius! I'm awaiting a settlement figure from my mortgage and i'll take it from there.

No probs, hope you get a good deal :)

Hope the settlement figure is less owing that you thought, one thing about my offset account is that you can see daily how much your actual balance is and exactly how much you save per day. God I sound so very sad don't I!

One of the joys of owning a house..... getting old before our time.

My parents have one of these, and my mum 'card tarts'. She has a deck of credit cards with 0% interest on them, but because she has an enormous overdraft (mortgage), she can use the cards for 'balance transfers' into her 'overdraft'. She knows exactly when they are all due up, and organises new ones 6 weeks in advance of 0% expiry.

I think they owe in the region of half a house this way, but it's all actuallly in the bank available to go back on the cards if need be - but don't try this if you're not VERY organised :nono:

I dont think I'm that organised! My dad has offered to put a lump some i my account tohelp offset some of what I owe, knowing he can get it whenever he wants.

Why can't I have relatives like that? Yes, he can link his account up at the Woolwich, I guess it's the only way my daughter could ever own a home if we helped, God knows how much they'll be in the future it's madness!

I thought of getting a 'oneaccount', but didn't like the idea of not having any interest on my savings! To shorten my mortgage period, what I do instead is save up and then pay lump sums off my mortgage loan

Hi

I've got a one account & its great if you're organised & if you don't feel the need to spend every last penny thats in your account every month - therefor only paying the interest off (which they take from you automatically). It would be better if they would also "hide" your capital from you but as they don't, its really tempting to dip into it. Glad I got one though as it is flexible & if you have equity in your house you can dip into it if you need. Hope this helps, Lou x

Now the mortgage market is changing again, and interest rates are shifting in the opposite direction, we've just taken a gamble on a 10 year fixed repayment mortgage. For the time being, stability is more important to us than playing games with our finances

I suppose a one account mortgage would have suited us in the past, as I tend to work on and off, then we blow my wages on big projects in the house or on a holiday - which means we have lumps of savings sometimes which would be working harder for us if offset against the mortgage

I've just looked into a one style account and spoke to a friend who happens to be a mortgage adviser.
His advice was not to bother unless you reguarly have between 20 - 40 k in balances across your savings and current.

The main reason that the calculators predict you paying off 10 years early is that when you say that you normally have £500 a month unspent, they actually allocate it to go to the mortgage, not just for interest, but permanently.

We've opted for a fixed rate flexible (ie can make overpayments whenever we like). Not such a long period as strix, we've only gone 2 years.

If you have decent online banking you can move most of your salary out of your current account into savings when you get it, and then just keep transfering back in what is needed, that way you're getting a reasonable interest rate on your balance.

If you find that you've got a couple of grand spare every 3 or 4 months then just chuck it into the mortgage, and if not, then it's not a problem.

Hmmm, not sure with the 20 - 40K balance, it all depends on how big your balance is so you can't really generalise.

As to fixing, I once fixed my mortgage for 5 years at what I thought was a good rate, never again unless there's no redemption fees. Being tied to a higher rate is very demoralising, nice if you need to know exacly how much you're paying for the next few years but no one has a crystal ball.

When I use my capital I shall opt for a discounted rate and shop around, everyone should review their mortgage every few years, gone are the days when you had one for 25 years like my parents and never reviewed what you were paying.

At the moment I am currently remortgaging every two years, but knocking a year off as well (I hope I've explained it good enough), so I suppose by doing that I'm knocking a third off my repayment term. It all sounds so tempting though, paying it off in 4 years.

Hmmm, not sure with the 20 - 40K balance, it all depends on how big your balance is so you can't really generalise.

As to fixing, I once fixed my mortgage for 5 years at what I thought was a good rate, never again unless there's no redemption fees. Being tied to a higher rate is very demoralising, nice if you need to know exacly how much you're paying for the next few years but no one has a crystal ball.

When I use my capital I shall opt for a discounted rate and shop around, everyone should review their mortgage every few years, gone are the days when you had one for 25 years like my parents and never reviewed what you were paying.

that's quite true, and like I said to my friend, if we had 40k in savings, we wouldn't offset it, we'd just pay the mortgage off.
The balance of your wages staying in your account for approximately half a month each time you get paid isn't going to make a huge difference to the amoutn of interest you pay though.

The reason the calculators always end up saying that you can pay off 10 years earlier is because when it asks how much money you usually have left at the end of the month, and you put £250, it counts that as going directly towards teh capital and staying there. It's not only offsetting, it's also overpaying.

When most people say that they have £250 left at the end of the month, it's actually allocated at some point in the future to something like a holiday or a car or an extension, or, or, or...
And if it isn't, then you can achieve the same with any mortgage that allows overpayments.

So the only difference between a one account and a flexible mortgage is that the balance you maintain in your accounts offsets the mortgage, if you work this out, it's not as large an amount as most people think.

I went to the one account's mortgage shrinker online and even though I admitted that I only have about £50 left in my account at the end of the month (if I'm lucky) they still reckoned they could shrink my mortgage by 11 years. How is that possible?!

This is exactly why I started this thread, it all sounds too good to be true, and all the hastle having to keep track of your finances.... I've never been the best at that anyway!:loopy:

I don't know how they calculate what's left at the end of the month, I don't know if the Woolwich calculator works this way. I always have some left anyway, being a good girl ;) and always plenty of savings and it's worked for me so far as after nearly 4 years I've paid off 1/3 of the loan which I think is good going. However I realise I've sacrificed interest on my savings for that but I'd rather get rid of the mortgage faster.

Have you seen the programme 'pay off your mortgage in 2 years'? (I have spoken with Rene!) Very interesting and it's a growing desirable trend here, in the US they have parties when they've paid off the mortgage. I for one hate paying all that interest but you don't have the choice if you want a home.

Whatever you decide to do take good advice from an IFA.

I've just looked into a one style account and spoke to a friend who happens to be a mortgage adviser.
His advice was not to bother unless you reguarly have between 20 - 40 k in balances across your savings and current.
That's less than my parents have 'tarted' into their account ;)

However I realise I've sacrificed interest on my savings for that but I'd rather get rid of the mortgage faster.
I'm always amazed at how few people are capable of doing the maths for this one.....

if you have a separate mortgage and savings account, and for arguement's sake you have the same in your savings as you owe on your mortgage..... with me so far?....

If no payments are made at all, after a period of time, you'll find that you owe more on the mortgage than you have in your savings, because the mortgage rate is always higher than your savings.

Still with me?

after x number of years, this leaves you out of pocket as the interest rates don't match




Right - the 'one' account

All of your money is available to stop the interest on your mortgage building up. This means the reality is that you are left with more money in your pocket, as you've paid out less.

Confusing?

you have a savings account at (for arguement's sake) 5%
and your mortgage is (eg) 6%

Where do you stick your spare £100 quid for it to work hardest for you?

If you stick it in your savings account, there's still 1% of your mortgage interest that your savings earnings aren't covering for you.

put it into your mortgage account as an overpayment, and you can draw on it later, but you haven't had to pay out that extra 1% - so you're quids in ;)


(yes, I know that's far too much of a simplistic model, but the principle is there)

completely agree with you strix, but to achieve that effect you do not require a one account.

Have a flexible mortgage, instead of putting money into your savings, put it into your mortgage as an overpayment. Net result, same as above, but you have far more choice of mortgage lenders and can find a better interest rate.

That's why we don't have a one account Cyclone ;)

We opened a woolwich one, and closed it again before we even used it ;)