Best mortgage provider

For the third year running, the One account, owned by the Royal Bank of Scotland and formerly branded Virgin One, has scooped the award for best mortgage provider.

The One account, a pioneer of the new breed of current account mortgages, has built up 103,000 customers and ?5.8bn of committed customer borrowing facilities since its launch in 1987.

Managing director Jayne-Anne Gadhia says: "Word of mouth is the key to our success. Nowadays, customers are demanding much more than just 'good' service, and won't recommend a company offering only that. Consumers want great service and that is what we aim to deliver at the One account, each and every time we speak to customers. As we continue to grow, we are committed to sustaining this approach and continue to help people plan for the unexpected, cope with the unexpected and do the unexpected."

The workings of the innovative 'all-in-one banking' account, which can be applied for and run by phone, via the internet or through intermediaries, are well publicised. By borrowing and saving through the same account, you can cut your interest bill because any money that goes in - be it savings or monthly income, immediately reduces what you owe on your mortgage and loans. Interest is calculated daily, so you are only charged interest on what you owe at the end of each day. You only pay a mortgage-style interest rate (currently between 4.85% and 5.7% depending on the size of your mortgage in relation to the value of your home) for all borrowings, no matter what you use the money for. Meanwhile you are effectively earning tax-free interest at the mortgage rate on your savings and any spare cash that would normally be earning next to nothing in a current account.

The company claims that eight out of 10 households with combined borrowings of ?50,000 or more would be better off with a current account mortgage than with a traditional suite of products, even if they maintained exactly the same spending habits. The account provides best value to people who aim to pay off their mortgage early and nearly 90% of its customers are currently ahead of their repayment plans.

It concedes, however, that some groups, such as people with small savings on a relatively low, steady income, will not reap such financial benefits from the One account and may be better off shopping around for 'best buy' conventional products.

All well and good - but given the recent proliferation of similar products, some with lower interest rates, which let you offset savings against borrowings, how has the One account managed to retain its winning position? The runner-up for this year's award, First Direct's Smartmortgage, for example, is a flexible, offset mortgage which pays and charges a market-leading rate of just 4.6% on all monies in a customer's various borrowing and savings pots. Why didn't it win?

The answer, says spokesman James Duffell, is that the One offers "ultimate flexibility" combined with "unparalleled customer service".

"We believe the One account is the most flexible financial product available on the market," he says. "It allows overpayments, underpayments, payment breaks and drawdowns, often without any prior authorisation. It also allows customers to view and manage their finances in a way that suits them - either as one account or as lots of individual pots - yet still keeps the underlying flexibility of one single account."

Janine Wardle, a self-employed dentist from Cheltenham, took out a One account mortgage in 1998. Since then, she says, "I've made the most of its flexibility and saved myself a small fortune too".

After regularly remortgaging to get the best rate, Ms Wardle calculated she'd be better off with a new current account mortgage. She wanted the flexibility to overpay without penalty whenever possible, but also to borrow back when necessary to suit her fluctuating income as a dentist. She plumped for a One account on a rate of 4.85% with a facility allowing her to borrow up to 75% of the value of her home. The plan has paid off and she is currently ahead of her repayment schedule by ?8,000.

She has also made good use of the payment break and drawdown facilities. "The account has given me the flexibility to take a recent three-month sabbatical during which I learnt to fly light aircraft, for example," she says. "And at a time when I was temporarily out of work and my car packed up, it meant I could simply buy a new car instead of throwing good money after bad repairing the old one. I definitely made the right choice taking a One account."