My point is that a lower interest rate on the mortgage is usually a lot more important than the effective rate you get on savings, given that for most people the mortage amount is a lot bigger. What you care about in the end is how much money you pay in total. Indeed, there seems to be a curious psychology that some people seem to prefer to have a higher interest rate with an offset mortgage because that means they get a higher rate on the savings part!
Cheshire b/soc. I'm not sure if it's still available, but you can look at e.g.
indeed. In my case (I'm self employed) the savings are high, my earnings fluctuate and I drift in and out of higher rate tax. Apart from the simple economics of it the lack of paperwork, call centre admin and shifting things around is of significant value to me. YMMV. I could not be relied upon to minimise interest paid if it required me to move money from one pocket to another, or call it something else, or "take a payment holiday" or all the other BS in some of these allegedly flexible mortgages.
The Sunday Telegraph quoted a survey where only about 20% were aware of flexible mortgages and cited a "deluge of account numbers and paperwork" that had resulted from opening one of the less sophisticated ones.
The Cheshire tracker is now 1% above base rate with 0.25% above for the first year. It also appears to be a standard mortgage with a modicum of flexibility around withdrawing previous overpayments or taking payment holidays against previous overpayments. It isn't comparable to the One account in that there are no current account services and the flexibility is far less.
Unless the T&C have changed I would say that it's pretty much as flexible as the One account, but I agree that it's less convenient if you want to be constantly putting money in and taking it out (although no worse than a traditional postal savings account) - in my case I'm just overpaying by a fixed amount each month. Even if you need that flexibility there are offset mortgages, e.g. Barclays/Woolwich, at lower rates than One. I don't see the lack of a current account as a disadvantage, it means that you can use any current account you want rather than being forced to take a specific one. Certainly the idea of paying a few hundred pounds a year extra net doesn't appeal. As with many things (e.g. the tracker fund) I think it's really a tribute to Virgin's marketing that they can charge people over the odds and convince them that they're getting a good deal! (and yes, I know that it isn't Virgin any more, but they established the branding).
not really, you can take out a One account mortgage and then increase the debt for several months without making any "mortgage payments" (whatever they are) except having the interest deducted. This is not the same thing as being able to take back "overpayments" only when you have made them. Definitely less flexible.
if you can find the rate, that is, the Woolwich says "initial rate
4.85% APR 5.1%" whereas I'm on 5.1% with the One account. I'm guessing the Woolwich rate is 0.25% discount for the first year but that's as clear as mud. "Initial rate" might also just mean that's the current rate as its variable. I can live with 0.25% extra - £150 pa.
I do see that as a disadvantage because I would have money sat in a zero or near zero interest environment. The Woolwich offset appears to tackle that (it came along after the One account) .
there are also those of us who value and benefit from the flexibility and simplicity of communications and for whom the modest or non-existant interest rate penalty is worth paying. Bit like legions of people stick on the same SVR mortgage because they have others things to do than chase the latest rate offerring.
Effectively that just means that you start with a bigger mortgage of which part is undrawn (I assume there is still an upper limit!)
I agree that it isn't very clear, but looking on the Barclays site it appears to be a tracker at 0.85% above base rate. I suspect the difference with the APR is down to the latter including all charges, and maybe timing differences. I also looked on the virginone web site but I couldn't see anything about rate guarantees at all, just the current rates.
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