One account question

[Dave_ST220]

I know a few people on here have the one account for their mortgage, i'm all signed up and waiting for completion day. Last night i was pissing around with their calulator which claimed i could be mortgage free in 4 years(nice). Now, i assume that is based on the savings i plumb in wiping out the debt, what happens when your savings are the same as the outstanding mortgage debt but you don't want to pay it off? Do you then in effect have a zero interest rate mortagge which you can continue to pay off?

[cinque]

Once your savings exceed your mortgage, the account will earn interest, only on the amount "over" what you owe on the mortgage.

i.e. mortgage £100k savings £110k you will receive interest on £10k

Benefit of these accounts is that you will have a pre-arranged draw-down, which makes access to funds very easy.

I liked the flexibility of these accounts (I had the IF one and would recommend).

[Dave_ST220]

So you receive interest for the £10k but do you still pay interest on the £100k? The way they explain it is if you have £100k mortgage but say £50k savings then you only pay interest on £50k.

[cinque]

No

Once you are in "positive" territory, you will receive interest on the savings (which will be taxable).

You have effectively "netted-off" the debt, therefore you pay no further interest on the borrow (as you have more on deposit than you owe).

IF you decide to pay it off they normally charge a small admin. fee to re-register ownership at the Land Registry (and you get the rather unimpressive deeds papers sent to you).



(In your instance if you have £100k debt, against £100k savings you pay nothing in interest. Go a pound over in savings and you gain interest on the £1 ).

Edited by cinque on Wednesday 29th July 15:48

[Dave_ST220]

Arhh, thanks, i guess it is "fair" to pay tax on the savings as it is no longer offsetting a debt. But by the sounds with good management you can in effect have a zero interest debt for the remainder of the term.

[Ungarsee]

Assuming the One account still runs like it always has, the easiest way to think of it is like a dirty great overdraft so it is excellent for people who get a bundle of cash in but like having access to a large borrowing facility. I look after a lot of property developers and they absolutely love these if they need a quick injection of short term cash.