The Consumers' Association says all-in-one accounts may not be money savers as higher interest rate...
The Consumers' Association says all-in-one accounts may not be money savers as higher interest rates and poorer introductory deals could mean consumers end up paying more overall.
The report concludes that an all-in-one account won't necessarily save mortgageholders and investors money. Interest rates on these accounts are often higher than on traditional mortgages, and they tend to have poorer introductory deals.
Although it may appear that the client is saving money by linking their mortgage with their current account and savings, the CA stresses some traditional mortgages have similar features to all-in-one accounts, such as allowing you to make one-off or regular overpayments.
Alternatively, a person could reduce the size of their mortgage simply by paying a larger deposit with their savings.
Helen Parker, Editor of Which? said: "An all-in-one account won't necessarily save you money. Higher interest rates and poorer introductory deals might mean, you end up paying more overall. You may be able to save yourself money with a traditional mortgage as some have similar features to all-in-one accounts and may allow you to pay more on top of your normal monthly payment or make one-off payments."
The CA describes all-in-one accounts simply as flexible mortgages which allow a person to link together different accounts - for example, a current account, a savings account and a mortgage. Savings can then be used to offset borrowings, which means a reduction in the amount of interest paid on a mortgage.
There are two types of all-in-one account, explains Which?.
Current account mortgages (CAMs) and offset mortgages. CAMs combine everything into one account, whereas offset mortgages keep accounts separate.
Both CAMs and Offset mortgages have tax benefits. Offset mortgages are flexible and can be good for people with savings who are prepared to use them to reduce debts, but want to keep separate accounts.
CAMs also have flexible features combined with the benefit of linking a mortgage to other accounts. CAMs tend to have less competitive rates than offset mortgages and as the accounts are combined it could be easier to lose track of what is happening inside them.
Which? reviewed all-in-one accounts offered by Intelligent Finance, Northern Rock and the Woolwich. It also looked at current account mortgages on offer at Britannia, Yorkshire and Clydesdale Banks and Virgin.
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