Can you really crack a better deal putting all your eggs in one basket?

Save £20,000 on your home loan repayments - or even more. That's the alluring offer from The One Account (formerly Virgin One), Woolwich Open Plan, Britannic Money and other all-in-one mortgage, short-term borrowing and cheque book packages.

The idea is that you put all your financial eggs into one "current account mortgage" basket including your monthly pay cheque and savings.

The credits offset the debt, so your savings effectively cancel out potentially high-cost borrowings such as plastic cards and personal loans, as well as home purchase cash. So how can these lenders afford to give away so much more than competitors? And why doesn't everyone sign up?

Figures seem unanswerable. The One Account, now part of Royal Bank of Scotland, states its website calculations are "validated" by expert David Goldreich at London Business School. It shows someone borrowing £70,000 paying about £20 a month less, thanks to their savings.

But the key is in the interest rate. The One account typically charges 4.95% and uses that as a comparison. But Northern Rock has conventional two-year fixed rate loans for as little as 3.85%. "It's horses for courses," says Kevin Paterson at brokers Park Row.

"The figures depend on the interest rate charged and how you use the account. But it is clear you need substantial money self-discipline to work it.

"These deals have a generous overdraft, so it is easy to build up capital via repayments and then blow the lot."

David Hollingworth, at brokers London & Country, has come up with examples of which horses are for which courses.

"It hinges on whether these deals are good enough to be better than an ultra-low interest rate," he says.

· Graham and Yvonne are higher rate tax payers with a £225,000 loan and 20 years remaining. Graham has £50,000 in cash and wants to reduce the mortgage. The Woolwich Open Plan at 4.7% would give an £8,225 annual interest charge. But cutting the loan by £50,000 and signing up to a two-year discount with Stroud & Swindon at 3.59% would cost £6,282 a year - almost £2,000 a year better off.

· Adrian is a flat owner with an £80,000 mortgage and £10,000 in savings as an emergency fund. Using the One Account at 4.95% would reduce loan costs to £3,465 a year. A two-year discount with Staffordshire, at 3.35%, would cost £2,680 - £785 less than the One Account.

He could also earn extra interest on the savings, so he is better off with a conventional loan.

· Jasmine and Jeremy have two children. They have £60,000 savings which they want to set aside for educational fees and a £130,000 mortgage. They also want to overpay the mortgage when possible. They could earn around 2.4% net on the savings (some £1,440 a year).

Taking Abbey National's 3.45% tracker for two years (which allows 10% overpayment a year) they would pay £4,485 a year - a net cost of £3,045 after the savings.

But if they used Newcastle building society's offset mortgage, with a pay rate of 3.65% for six months, then 4.25% after that, the first year's cost would be £2,765, then £2,975 thereafter, making them £350 better off in two years.

So this couple would be gainers by opting for the Newcastle loan.

Filling a financial cavity

Dental practitioner Clive Gibson was left with a financial cavity when a long-term relationship broke down last year. His former partner was owed a share of his £285,000 Staffordshire home, bought in 1988 with a £90,000 Abbey National endowment.

"I knew the life policy with Scottish Provident was wrong," says Dr Gibson, 45.

"So I went to Andy Dixon of Beauchamp Financial Services, who lectures dental students on finances, for a new deal."

The Leamington Spa-based adviser filled him in with a Woolwich Open Plan offset mortgage - now at 4.75%.

"I'm self-employed, so the £20,000 or more I sometimes have for future tax bills offsets the mortgage. It was very easy to do, and there were no charges," he says.

The mortgage money arrived quickly - an advantage in paying off his ex-partner.

The loan is flexible. Cash from his new partner's home sale will help cut monthly payments. And the loan can be stretched in the future for his planned extension.