Best mortgage and current account

Virgin One, a joint venture between Virgin Direct and the Royal Bank of Scotland, has carried off the award for best customer service in both the mortgage and current account categories with its innovative account.

Launched as a pilot in 1997 and then as a full roll-out to the public in 1998, the Virgin One account was the first of the new breed of current account mortgages.

Spokesman Scott Mowbray says: "The idea came from Australia where flexibility and offset products are all the rage. The One account puts all your finances - your mortgage, loans, savings and current account in one place - saving you money and keeping things simple."

Virgin One has built up a mortgage book of more than £3bn, comprising around 65% remortgages and 35% new home purchases, and has 70,000 customers. Last year it took 3.5% of all new mortgage business in the country.

Managing director Jayne-Anne Gadhia, reckons the One account has been successful because "so many of our customers have recommended it to their friends. There's no rip-off and the customer's always in control."

Borrowing and saving through the same account can cut your interest bill because as soon as your monthly income, or any savings, is paid in, it reduces the amount owed on your mortgage. And, as interest is calculated daily, you pay only for what you owe at the end of each day.

Virgin One says eight out of 10 homeowners with a mortgage of more than £50,000 would save money.

Customers pay only a mortgage-style interest rate (currently between 6.35% and 7.2%) for all borrowings, rather than high personal loan and overdraft rates. Meanwhile, they effectively earning tax-free interest at the mortgage rate on savings and on any spare cash.

The account is fully flexible, allowing home loans to be paid off in the customer's own time.

Runners-up in the mortgage provider category are Standard Life, Egg, First Direct and Direct Line.

Julie Moulsdale, spokeswoman for Direct Line, says: "As a telephone-based company we do not have an expensive branch network and can pass savings on to our customers."

In the current account provider category, runners-up include Smile, First Direct, Citibank and the Co-operative Bank.