1. What kinds of bank accounts are offered by the banks in your country?
2. What is a mortgage? How do people usually arrange and repay their mortgages?
3. Do you think bank customers are happy with the way their bank accounts and mortgage accounts are handled? What could be done to improve the system?
A. Understanding main points
Mark these statements T (true) or F (false) according to the information in the text. Find the part of the text that gives the correct information.
The One account...
1. combines savings and debts in the same account.
2. cuts the cost of borrowing.
3. pays higher interest than other accounts.
4. provides you with a chequebook and bank cards.
5. limits the number of withdrawals you can make.
6. offers you an agreed overdraft facility of thousands of pounds.
7. requires you to pay your salary into it.
8. requires that you pay off your mortgage in fixed regular instalments.
9. sets a fixed term for your mortgage repayment.
10. allows you to pay off your mortgage whenever you want.
11. is only offered to married couples.
12. calculates interest on a daily basis.
B. Understanding details
A potential customer asks questions about the One account. Find the answers.
1. My house is valued at £50,000. Can I borrow £60,000?
2. My house is valued at £50,000. I need an 80% mortgage. Can I borrow an extra £10,000?
3. I plan to retire in 20 years. Can I have 25 years to pay off my mortgage?
4. I want to pay off some of the capital on my mortgage early. Do you make a charge for this?
5. I want to pay off some of the capital on my mortgage early. Will you credit the repayments immediately?
6. If interest rates go up, does that mean I'll have to pay more?
It's all for One and One for all
Virgins new account gathers all the elements of the personal finance jigsaw into one complete picture.
Most people will spend most of their life owing other people money. They do not realise that they can save money (sometimes quite a lot) by consolidating their income, savings and debts into a single bank account.
This, of course, is not the traditional way that people run their personal finances, with salaries going into one account, savings into another and a completely different arrangement to pay off the mortgage.
The One account allows you to put your savings and borrowings together, keeping the cost of your borrowing to a minimum.
When you open a One account, you negotiate an overall borrowing facility that can represent as much as 95% of the value of your home. Thus a couple with a £100,000 house and needing an 80% mortgage might set up a loan facility of £95,000, giving them an additional £15,000 to call on when required.
Once the lending facility has been agreed, you can dip into it whenever you want and, equally important, pay it off however you choose. You must satisfy the bank that you will have repaid the debt by the end of an agreed term, such as 25 years. The main proviso is that you must nave repaid the debt by the time you retire.
Your salary must be paid into the account and you must pay interest (which is calculated daily) at a current rate. At the same time, the One account is run like an ordinary bank account (you get a chequebook and bank cards and there are no restrictions on the number of withdrawals).
On the face of it, only a fool would put his money into one bank earning interest at, say 6%, and then borrow the same amount from another bank at 10%. But this is precisely what most people are doing they are funding mortgages at rates much higher than they are getting for their savings. And for much of the time, they are not getting any interest at all on money in their ordinary bank accounts.
Most borrowers have little choice about how to manage mortgage debt, other than to pay regular amounts prescribed by the lender. If they want to pay off capital early, they find that some lenders charge for this, while many lenders will not credit any extra capital repayments until the year end. This means that for most of the year interest is being charged as if for a loan that is bigger than the one that actually exists. Take, for instance, a mortgage of £60,000, repayable over 25 years at an interest rate of 8.55%. Your typical loan repayments would be £490 a month. If, however, your repayments were taken into account the moment they were made, you could repay your loan 11 months early, saving more than £5,000.
Where you can really start eating into your debt is by having your salary paid into your mortgage account. As salaries rise and you can afford to repay more of your debt the term of what, traditionally, would have been a 25-year mortgage be cut quite dramatically.
A. Complete the sentence
Use an appropriate form of each word to complete the text below.
loan / owe / debt / borrow / repay / lend
Joe took out a (1) so that he could buy a car. The car cost £10,000 and the bank agreed to (2) him £8,000. About a year later, Joe lost his job and started to worry about his (3). How could he (4) it with no salary coming in? Out of the £8,000 that he had originally (5), he still (6) more than £5,000.
B. Word search
Find a word or phrase in the text that has a similar meaning.
1. ongoing opportunity to get extra credit without asking the lender (para 4) f
2. period of time in which a loan must be repaid (para 5) t
3. rate of interest which is set at the present time (para 6) c
4. action of taking money from your bank account (para 6) w
5. money which you it deposit with a bank, which earns interest for you (para 7) s
6. if you can do this, you are able to pay for something because you have enough money (para 9) a
C. Understanding expressions
Choose the best explanation for each of these words and phrases from the text.
a) putting everything together b) making everything more secure
2. call on
a) to be available b) to be agreed by telephone
3. dip into it
a) take all of it at once b) take part of it at any time
4. main proviso
a) the main point b) an important restriction
5. on the face of it
a) it seems obvious b) at the present time
a) fixed b) suggested
7. eating into
a) rapidly reducing b) gradually reducing
Match these verbs and nouns as they occur in the text.
1. pay off
3. set up
b) your finances
c) a mortgage
d) a loan facility
E. Complete the sentence
Use an appropriate phrase from Exercise D to complete each of the sentences.
1. He of 8% on his account.
2. She wanted to start her own business, so she asked the bank to .
3. She lost her job and with no regular income it was difficult to .
4. He was an accountant, so it was not surprising that he was good at .
F. Word search
Find a word in the text that has a similar meaning.
1. salary (para 1)
2. total (para 4)
3. extra (para 4)
4. pay into (an account) (para 8)
5. pay off (a debt) (para 8)
Over to you
1. Imagine you are a representative from the bank offering the One account. Summarise the key aspects of the One account as if explaining it to a potential customer.
2. Give your opinion about the One account. Would you choose this type of account to help you run your finances?
3. Imagine you are a potential customer. Make a list of questions you would like to ask about the One account. Write a letter to your bank asking them to answer your questions.