Oneaccount.com vs's offset mortgage?
Discussion
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland) - reckons it better than an offset mortgage for a variety of reasons I don't understand 
Basically it's an account where you put your borrowing (mortgage etc.), savings and salary into one account. The interest you loose on savings is made up by savings on interest on your borrowing (always at a higher rate of interest) and the fact that you don't pay any tax because mathematically you don't have any savings!
I guess I'm a stick-in-the-mud because I still have traditional bank account and mortgage but more and more I'm getting fed-up with my bank and on the face of it this certainly looks interesting.
Anyone here got any thoughts or experience of this?
Rich...
Basically it's an account where you put your borrowing (mortgage etc.), savings and salary into one account. The interest you loose on savings is made up by savings on interest on your borrowing (always at a higher rate of interest) and the fact that you don't pay any tax because mathematically you don't have any savings! I guess I'm a stick-in-the-mud because I still have traditional bank account and mortgage but more and more I'm getting fed-up with my bank and on the face of it this certainly looks interesting.
Anyone here got any thoughts or experience of this?
Rich...Have a look at www.moneysavingexpert.com for the pros and cons.
Sometimes these accounts are worth it, but due to the higher interest rates they charge on borrowed money you need to save a large amount to make them worthwhile.
Sometimes these accounts are worth it, but due to the higher interest rates they charge on borrowed money you need to save a large amount to make them worthwhile.
richb said:
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland) - reckons it better than an offset mortgage for a variety of reasons I don't understand
I'd like to hear your mates reasoning on this. To my knowledge all the offsets operate on a daily rest basis, Offset wouldnt make sense otherwise.
Certainly true that if a higher rate tax payer...but my main concern is that there's the temptation to go spunking money left right and centre, as you can always access it. I guess you have to set "targets" each month to make sure you improve the balance by so much each month?
Not really an issue at the minute for me though as my mortgage is fixed for another 3 years - but I suppose this protects against rising interest rates, which is a huge bonus these days. Will definitely be looking into this in 2-3 years time.
Not really an issue at the minute for me though as my mortgage is fixed for another 3 years - but I suppose this protects against rising interest rates, which is a huge bonus these days. Will definitely be looking into this in 2-3 years time.
Smartie said:
doe sit also mean that when you go to the ATM it says you're £100K overdrawn? Would depress me every day!
Humm... you certainly see that you are £100,000 o/d 
Eric Mc said:
Probably more beneficial if you are a higher rate tax payer.
I am... scotal said:
richb said:
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland) - reckons it better than an offset mortgage for a variety of reasons I don't understand
I'd like to hear your mates reasoning on this. To my knowledge all the offsets operate on a daily rest basis, Offset wouldnt make sense otherwise.We have an Intelligent Finance off set mortagae which has worked really well for us over the past 5 years or so.
IIRC we have paid off almost £30K in that time because of the off-set savings accounts we have. Pain in the arse to get set up but if you play the account properly then it can really make a differnce.
Traditionally, your salary goes in and then all your outgoing go erm out, leaving you with a little pot for the rest of the month.
What we did was move all our outgoing to the end of the month, the week before we got paid that way we had two full salaries sat in there of 3 weeks of a month and then within a week it all went out and then topped back up again with the next months salaries.
And with IF you don't have to be that displined, we have a joint mortgage account and then individiual current accounts and just move money within then whilst they all off set.
IIRC we have paid off almost £30K in that time because of the off-set savings accounts we have. Pain in the arse to get set up but if you play the account properly then it can really make a differnce.
Traditionally, your salary goes in and then all your outgoing go erm out, leaving you with a little pot for the rest of the month.
What we did was move all our outgoing to the end of the month, the week before we got paid that way we had two full salaries sat in there of 3 weeks of a month and then within a week it all went out and then topped back up again with the next months salaries.
And with IF you don't have to be that displined, we have a joint mortgage account and then individiual current accounts and just move money within then whilst they all off set.
I did some back-of-an-envelope calculations a while back.
They sound like a no-brainer but the interest rates are higher than non-offset mortgages so you need to factor that in. Plus you run the risk of using more cash than you would otherwise have, because the balance is all-in-one and harder to track.
I worked out that I needed to have a regular balance in cash/savings of around 10% of the mortgage to make it worthwhile. Now I'm fairly fastidious when it comes to planning and investments etc and I simply wouldn't leave such a large amount of cash lying around in a bank account, it would be invested or used to pay off a chunk of mortgage.
The tax free element should also be factored in, but I'd hope to get a damn sight more than 6% return on my investments so I'm on a interest only fixed rate standard mortgage at the moment - with savings invested in a share ISA that HAVE produced well over 6%.
They sound like a no-brainer but the interest rates are higher than non-offset mortgages so you need to factor that in. Plus you run the risk of using more cash than you would otherwise have, because the balance is all-in-one and harder to track.
I worked out that I needed to have a regular balance in cash/savings of around 10% of the mortgage to make it worthwhile. Now I'm fairly fastidious when it comes to planning and investments etc and I simply wouldn't leave such a large amount of cash lying around in a bank account, it would be invested or used to pay off a chunk of mortgage.
The tax free element should also be factored in, but I'd hope to get a damn sight more than 6% return on my investments so I'm on a interest only fixed rate standard mortgage at the moment - with savings invested in a share ISA that HAVE produced well over 6%.
leosayer said:
I did some back-of-an-envelope calculations a while back.
They sound like a no-brainer but the interest rates are higher than non-offset mortgages so you need to factor that in. Plus you run the risk of using more cash than you would otherwise have, because the balance is all-in-one and harder to track.
I worked out that I needed to have a regular balance in cash/savings of around 10% of the mortgage to make it worthwhile. Now I'm fairly fastidious when it comes to planning and investments etc and I simply wouldn't leave such a large amount of cash lying around in a bank account, it would be invested or used to pay off a chunk of mortgage.
The tax free element should also be factored in, but I'd hope to get a damn sight more than 6% return on my investments so I'm on a interest only fixed rate standard mortgage at the moment - with savings invested in a share ISA that HAVE produced well over 6%.
They sound like a no-brainer but the interest rates are higher than non-offset mortgages so you need to factor that in. Plus you run the risk of using more cash than you would otherwise have, because the balance is all-in-one and harder to track.
I worked out that I needed to have a regular balance in cash/savings of around 10% of the mortgage to make it worthwhile. Now I'm fairly fastidious when it comes to planning and investments etc and I simply wouldn't leave such a large amount of cash lying around in a bank account, it would be invested or used to pay off a chunk of mortgage.
The tax free element should also be factored in, but I'd hope to get a damn sight more than 6% return on my investments so I'm on a interest only fixed rate standard mortgage at the moment - with savings invested in a share ISA that HAVE produced well over 6%.
Any Savings in AN offset is effectively earning the Morgage rate TAX FREE ZERO risk, year on year
so for a higher rate tax payer it is equivalent 8% gross return ish, with the important bit ZERO risk and guaranteed... plus you can access it easily.
B
richb said:
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland) - reckons it better than an offset mortgage for a variety of reasons I don't understand Basically it's an account where you put your borrowing (mortgage etc.), savings and salary into one account. The interest you loose on savings is made up by savings on interest on your borrowing (always at a higher rate of interest) and the fact that you don't pay any tax because mathematically you don't have any savings!
I guess I'm a stick-in-the-mud because I still have traditional bank account and mortgage but more and more I'm getting fed-up with my bank and on the face of it this certainly looks interesting.
Anyone here got any thoughts or experience of this? Rich...
Basically it's an account where you put your borrowing (mortgage etc.), savings and salary into one account. The interest you loose on savings is made up by savings on interest on your borrowing (always at a higher rate of interest) and the fact that you don't pay any tax because mathematically you don't have any savings! I guess I'm a stick-in-the-mud because I still have traditional bank account and mortgage but more and more I'm getting fed-up with my bank and on the face of it this certainly looks interesting.
Anyone here got any thoughts or experience of this?
Rich...I can't comment about how good an accountant he is, but if he thinks its NEW...
These accounts have been around for getting on 10 years.
B
bjwoods said:
richb said:
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland)
I can't comment about how good an accountant he is, but if he thinks its NEW...These accounts have been around for getting on 10 years.
I have a OneAccount offset mortgage - and have to say it is a good product
Yuu dont necessarily have to go the whole hog and utilise it as a current account and combined mortgage - I have one which is just an offset mortgage (and keep a separate current a/c) in which you can pitch money in and out of as you see fit. Enabled me to reduce mortgage down to just 6k in 6 years and has a higher rate tax payer it really does make sense. Think the interest charged on the account is now 6.3%
Yuu dont necessarily have to go the whole hog and utilise it as a current account and combined mortgage - I have one which is just an offset mortgage (and keep a separate current a/c) in which you can pitch money in and out of as you see fit. Enabled me to reduce mortgage down to just 6k in 6 years and has a higher rate tax payer it really does make sense. Think the interest charged on the account is now 6.3%
I've used this type of product for the last seven or eight years. It's beneficial if you income fluctuates. In general the more fexibility it provides the higher the rate. Current account mortgages like One Account give you near instant near access to your money but the downside is that you pay a higher interest rate. I've got an Abbey flexible mortgage which means I can overpay as much as I want but it takes me three to four days to withdraw money.
In general terms it makes sense to have you savings offset the outstanding balance on your mortgage. However, ask yourself if you really need the flexibility, most mortgages allow you to overpay within limits. If you don't need to draw down regularly then you can pick up much better rates elsewhere.
pp
In general terms it makes sense to have you savings offset the outstanding balance on your mortgage. However, ask yourself if you really need the flexibility, most mortgages allow you to overpay within limits. If you don't need to draw down regularly then you can pick up much better rates elsewhere.
pp
Been thinking about this, would this work?
My Mortgage is joint with my gf.
We both have seperate current accounts and savings account
We have a joint account with an attached savings account.
In theory we have 6 accounts (I have a few more but that is another story), so could we use all 6 in an offset mortgage?
My Mortgage is joint with my gf.
We both have seperate current accounts and savings account
We have a joint account with an attached savings account.
In theory we have 6 accounts (I have a few more but that is another story), so could we use all 6 in an offset mortgage?
richb said:
bjwoods said:
richb said:
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland)
I can't comment about how good an accountant he is, but if he thinks its NEW...These accounts have been around for getting on 10 years.Virgin One website said:
The One account is a secured personal bank account with The Royal Bank of Scotland plc. 'The One account ', 'One account ', 'Make one day today' and the associated logos are trademarks of The One account Ltd. The One account, Woodland Place, Pinetrees Road, Norwich NR7 9EJ.
tigger1 said:
Certainly true that if a higher rate tax payer...but my main concern is that there's the temptation to go spunking money left right and centre, as you can always access it. I guess you have to set "targets" each month to make sure you improve the balance by so much each month?
Spot on. You set up targets when you take out the account, and statements tell you how you are performing against target. You can also set up savings plans (e-savings accounts) on-line and set things up so the on-line view shows you how much dosh you have after hiding the e-savings away, which can help, but ultimately the entire "facility" agreed at the outset is there to be spent if you have a mind to. They pretty much count on lack of willpower (and slightly higher interest rates of course) to make them money. In my case they're not wrong!
victormeldrew said:
richb said:
bjwoods said:
richb said:
A friend who's an accountant is excited about the new oneaccount.com (a sister company of Royal bank of Scotland)
I can't comment about how good an accountant he is, but if he thinks its NEW...These accounts have been around for getting on 10 years.Virgin One website said:
The One account is a secured personal bank account with The Royal Bank of Scotland plc. 'The One account ', 'One account ', 'Make one day today' and the associated logos are trademarks of The One account Ltd. The One account, Woodland Place, Pinetrees Road, Norwich NR7 9EJ.
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