Virgin One Account

[masteryoda]

Hi,

Thinking about getting the One Account mortgage/current account. Aside from the variable rate risk and having easy access to funds, what are the disadvantages of this type of product?

We have a £240k mortgage to be paid over 23 years, current deal is 5.79 % Fixed (one account 3.75 variable). We save £1500 per month, but getting married in June and finishing off renovations at the moment so we have only a few thousand saved that we’ll intially offset against the £240k.

We’d like to reduce the balance on our mortgage as quickly as possible and I think this product might help us do this efficiently?

Cheers,
Matt

[Andy_GSA]

masteryoda said:

Hi,

Thinking about getting the One Account mortgage/current account. Aside from the variable rate risk and having easy access to funds, what are the disadvantages of this type of product?

We have a £240k mortgage to be paid over 23 years, current deal is 5.79 % Fixed (one account 3.75 variable). We save £1500 per month, but getting married in June and finishing off renovations at the moment so we have only a few thousand saved that we’ll intially offset against the £240k.

We’d like to reduce the balance on our mortgage as quickly as possible and I think this product might help us do this efficiently?

Cheers,
Matt

One very important disadvantage to bear in mind with a One Account type of product is that they are normally secured overdrafts rather than a conventional loan over a fixed term, the loan is repayable on demand if the lender wishes.

This has significance if your finances ever take a turn for the worse and you exceed the overdraft limit (by interest being debited monthly to the account and you having insufficient income to pay the interest and the rest of the bills). If the lender wants to repossess the legal protection available for 'normal' loans of being able to obtain a court order to spread the arrears over a period of up to the remainder of the term is not available as this type of loan does not have a term and does not have instalments.

Whether this applies to the product you are thinking of very much depends on all of the small print of the loan conditions, and obviously this being PH everyone is dripping in cash with no risk of ever running short, but do make sure you check this aspect out before signing up.

[cailean]

Have a look at Firest Direct's offset version. With FD you can also have separate savings accounts, all linked for offset instead of the one account approach that I think Virgin uses.

[mgrays]

cailean said:

Have a look at Firest Direct's offset version. With FD you can also have separate savings accounts, all linked for offset instead of the one account approach that I think Virgin uses.

RBS do this too.

Santander seem to do standalone account

Yorhshire bank a little too far South for me.

First Direct..how do you get a £1k cash out for auctions/cars etc?

[BoRED S2upid]

I tired this many years ago. Main disadvantage I found is your balance is given or was given against your mortgage so you ask for a balance -£203,000 available balance £1,800 (or something similar) depressed me everytime I went to see my balance.

[masteryoda]

Cheers for the heads up guys.

I’m not too worried about the negative balance. I look at my overall balance sheet position on my finances anyway, well I am an accountant after all. I think this product will cut the cost of borrowing whilst we are mortgaged and I doubt over the long term my savings will earn enough interest to make stashing it away worthwhile. Didn’t realise this product was treated more like an overdraft (so payable on demand), but assuming we keep ourselves in work we should be OK.

Had the valuation and lending accepted and waiting for a formal offer in the next 5 days.

Matt

[R32]

I've got a oneaccount and had it for many years now. The only negative I can come up with is that it uses the variable interest rate, which is generally higher than you will get a fixed/capped rate for elsewhere. Oh, and managing the account via the website can be time consuming if you need to keep track of separate virtual 'piles' of money within the oneaccount.

The benefits outweigh this in my opinion though.

Basically you have a pot of money that you can do what you want with.

- No-one will chase you if you haven't been keeping up your monthly repayments (which of course are 'virtual' it being a oneaccount.) I assume the only time you will be contacted is if you don't have enough money in the account to pay off the interest each month.
- If you build up equity you can simply reuse back up to your mortgage limit without needing to speak to anyone.
- Obviously putting salary/savings into the account to offset and using 0% credit cards (thus keeping money in your account longer, reducing interest) is the best advantage.

So as long as you can sensibly manage the account its incredibly flexible.

[scooters]

apologies for sort of hijacking this thread but is it possible to include multiple accounts here (say, my business account?) this would massively reduce the amount of interest against our mortgage..

[worsy]

mgrays said:

First Direct..how do you get a 1k cash out for auctions/cars etc?

You go to a HSBC branch.

[worsy]

scooters said:

apologies for sort of hijacking this thread but is it possible to include multiple accounts here (say, my business account?) this would massively reduce the amount of interest against our mortgage..

Only personal accounts.