I see from recent (July) postings that the Virgin OneAccount is generally well-regarded. Is that still the case? Has anyone had any nasty surprises, having opened one without scanning the small print first?
The current interest rate seems competitive. Does it stay that way, or is it ground-bait to get you in; do they have a different (higher) rate once you're on the hook?
Any horror stories treated in confidence. De-spam my address for personal replies but, as usual, best to share it so others can benefit.
PS Hello again Phil - fancy a contractor lurking in a finance ng! ;-)
What interest rate are you paying on it? When I compared similar products a few years back it was about 1% higher (ie actually 20% worse), and there are very similar products, for example woolwich/barclays, IF & direct line from memory.
The IF offset is 5.95%. Woolwich Openplan 5.60%. Both of these are substantially less flexible than the One account, as is anything with the word "repayment" or "overpayment" or "payment holiday" in its T&Cs.
I did a an IF mortgage, when I took it out their rates were much better. They used to be .75% above base rates, they are now 1.2% above. IF have one rate, so for high LTVs, they may prove better value.
You can get flexibility from an IF account by moving spare money into a savings account instead of paying off your mortgage, then moving it back if you want to use it.
I have sold my house now and looking for a better deal for when I buy my next one. FWIW, I doubt I will go with IF again but the product is ok.
You have got to hand it to the Virgin marketing team. They may have pioneered the offset mortgage but they are not the most competitive when comparing other banks etc, offset interest rates, yet respected people on this newsgroup still favour The One account over cheaper offsets.
You pay what you pay and quite a few offset mortgage providers charge interest at BoE + 0.0075 for the term of the mortgage, so the general offset will currently cost 5.5%, although some, notably Woolwich have increased their products to BoE + .00875. The One account interest rate at its lowest LTV of up to 50% charge 5.85. If you want up to 95% which most other offset accounts still offer at 5.5%, The One account charges 6.45%.
We don't need Ronald to do the maths here. Lets indentify the specifics, what does the Virgin One Account offer that say the Woolwich does not, and does this justify the extra interest rate charge?
The One account is a current account mortgage..it is NOT an offset mortgage - THAT is it's beauty...it is fully flexible, draw out, pay in as and when you like.
5.5 years ago I started on 95% LTV (50K). 2.5 years ago I had the house revalued so I could drop the interest rate into the 50-75% LTV band. I now have a 64% LTV and 25K outstanding.
5.5 years ago I had ~30K in an ISA which increased by ~7%pa. As this was a poor risk/reward in comparison, I transferred 22K into the One Account.
I now pay 5.95% interest
It goes without saying that I operate it as my current account. ie salary/bills.
I took the mortgage out 5.5 years ago, so needs to be judged in that environment ie competitors. If you feel I should remortgage, justify it in figures.
I didn't pay any arrangement fee or MIG. Only life insurance was required - third party OK. It's no longer required, so I don't have it.
I had/have no other loans credit card debts.
I required a loan secured against my house, which, as long as I kept within the borrowing limit and paid it off when agreed ie before retirement, enabled me to operate it in any way I liked without extra penalties/fees beyond what is charged in interest. I wanted it to act as if it was a giant overdraft off my current account. I knew I was going to pay it down quickly but, wanted the facility available should I require it.
I was allowed to let the house out. The decision took a couple of hours.
I regularly do balance transfers from 0%/low% credit card offers. ~7-15K.
I don't know how the other accounts operate, so am interested to see using my own circumstances as an example.
Cheers
Daytona
These are the current One Account interest rates -
"Your facility in relation to the value of your home & Your One account interest rate -
What is the effective difference? With a Woolwich/Barclays OP you can draw against your flexible reserve at any time - you have a chequebook to make it as easy as possible! Further, ANY funds in Current or Savings accounts can offset - so the benefit is the same. Want to pay off bits - OK, if you really want to go ahead! The principle behind the two is identical, but Woolwich/Barclays charge less debit interest to start off with! So why choose The One? You still have not explained the true benefit!
Also forgot to add that you can take payment holidays for as long as you like, whenever you like....you just have to pay it back by the time you retire.
With the IF account I had, all the money you had in your account offset the mortgage. Therefore with a £80,000 mortgage and £30,000 in a savings account, you have the same benefit with either account of paying interest on £50,000. If you decide to spend some money, you spend your savings.
There is no difference between the accounts regarding how much money you pay interest on. The difference is that the one account has higher interest rate for higher LTV values. So if you LTV is greater than 75% you will pay more interest, less than 50% you will pay less (compared to IF's current rate of 5.95%) 2 years ago IF had lower rates relative to base rates, making them the better choice at the time I took mine out.
Presumably, there is a limit that the interest being added to the loan doesn't take the loan balance over a set limit (eg the original mortgage amount).
What (do you think) is stopping you doing that with an offset? Nothing! [Hint: Even if they don't let you stop interest payments, all you need do is transfer the "interest amount" from the 'mortgage account' to the 'current account' (which the interest is taken from), say the day before the interest is taken.]
Thanks to all - lots to think about. I suppose the main thing to keep an eye on is the interest rate (have to do that wherever I borrow). Interesting points about 0% cards - must look into that.
well spotted, I overshot and scrolled right to the bottom of the page, those rates were headed "Between 11.06.04 and 05.08.04 our interest rates were:" ie before the last rise. Sorry.
you can do anything you like as long as the negative balance on the One account stays above the agreed limit or "facility"
every time I look at an offset I see phrases like "you can make overpayments" or "you can withdraw extra money from the mortgage up to the amount you have overpaid" or "you can take a payment holiday for x months". These are all restrictions that the One account doesn't have.
Some of us don't want to have 3 accounts with the associated paperwork and shuffling of money when One will do.. A current account offset against a mortgage can match the interest rate benefits of a current account mortgage like the One account - but what happens if you take the balance of a current account in an offset arrangment below zero ?? Overdraft charges, interest and warning letters ?
No, they are not *restrictions*. They are simply names for things you can do.
"Phil Thompson" wrote
You could have just 2 with an offset - the mortgage a/c and a current a/c. Leave the mortgage a/c at maximum debit, and no shuffling of money is *ever* required!
"Phil Thompson" wrote
Well I can only speak for the FD offset - but with that, you have an agreed overdraft limit, which effectively just acts to increase the maximum "mortgage amount". When linked to an offset mortgage, there are no overdraft arrangement fees, no overdraft renewal fees, no overdraft charges (assuming you keep within the agreed limit - I've never found out what happens if you exceed it!), no warning letters and the interest charged on any "overdraft" amount is the same as the *mortgage* rate.
Don't forget that if you've kept the "mortgage a/c" balance at its greatest debit amount, by (say) leaving all money in the current a/c rather than "paying down" the mortgage a/c - then if the current a/c goes overdrawn you are actually borrowing **more** than the agreed mortgage limit!
So, to counter your question: "What happens when you take the balance of a One Account even more negative than the agreed limit???" !
they are restrictions if you can *only* withdraw overpayments. Also I'm not clear what a "payment holiday" would be - a zero interest period ? thought not - so does this mean that money is normally taken out of the current account as capital repayments ?
Borrow £90k on the one account and you can always take it up to £90k. If there is a concept of "overpayments" does this limit what you can do - for example if the "repayments" have reduced the mortgage debt to £70k without making any "overpayments"
I see, so the current account terms are modified by the offset. Fair enough. Is the overdraft limit set at the outset and is it fixed, or does it increase if you are making capital reductions in the mortgage account, such that mortgage debt plus overdraft = original loan
you would have to ask to increase the facility ahead of trying to take it beyond the limit, I guess. Otherwise it would bounce (this is an assumption on my part).
You can always return to the full loan amount, if you've actually made capital repayments, you need to ask for the money back, but there's no requirement or reason to make capital repayments of course.
With FD, they are *very* flexible - with a number of options:
(A) You can either have interest deducted from current a/c each month, or added to the mortgage a/c; (B) You can set up a Standing Order for a fixed amount from the current a/c to the mortgage a/c each month.
So, for instance, you can choose to have an (effectively) interest-only mortgage by choosing 'current a/c' in (A) and 'nothing' in (B).
Alternatively, you could set it up more like a normal repayment mortgage by choosing 'mortgage a/c' in (A) and a set amount in (B) equivalent to the payment under a relevant repayment mortgage (but you'd need to consider changing the monthly amount each time the interest rate is changed - as reminded to you by post each time!).
Either way you can make a transfer at any time *to* the mortgage a/c (to "overpay"), or conversely make a transfer *from* the mortgage a/c (up to the original limit) to "withdraw extra funds".
"Phil Thompson" wrote
Nope - see above.
"Phil Thompson" wrote
The overdraft limit is set separately, and you can apply for an increase at any time. Between these applications, it'll be fixed - just like a normal overdraft.
If you've made any "capital reductions" on the mortgage a/c, you can claim any of this back at any time (even do it yourself in the online banking!).
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