Advice on accounts

speac

Hi,

I'm looking for advice on how best to arrange my accounts.

I'm soon to take out a mortgage and wondering from what account I should set up the mortgage Direct debit.

At the moment my salary comes into my current account monthly and I have direct debits set up to transfer money monthly into a few savings accounts from it, all of which will be drained when I buy the house!. So I was planning on continuing like that, but I was wondering is that what most people do?
Should I set up an account especially to hold money for my mortgage, that I can keep any extra money I save in, and then have the direct debit for the monthly mortgage come out of that account?

Any advice appreciated,

Thanks!

adam88

I have two accounts.

First account is my current account- this receives my wages and immediately I transfer the montly total of all my direct debits plus a few pound extra into my second account which I call my direct debit account. What's left in my current account is what I have to live on each month.

My direct debit account is used to pay all my direct debits and standing orders. There's a debit card attached to it but I don't have clue where it is or the pin of it, this is so that I won't dip into it when I'm running low on funds.

The purpose of this second account is so that if worse comes to worse I know my mortgage, vhi car loans, credit cards, esb etc will be paid. If I only had the one account I know for a fact is end up spending the money I had earmarked for the mortgage

speac

Thanks Adam,

That's a great help.

dennyk

As long as you keep a reasonable buffer in your primary current account to allow for any unexpected events (late paychecks, double-charged bills, etc.) without overdrawing, I'd say there's no reason not to let your mortgage debit that account. Keeps things simple and avoids issues arising because you forget a deposit or miscalculate something when moving your funds around and end up overdrawing or being late on a bill.

Depends on how you are with managing your money, though; if you don't have the discipline to keep a proper buffer in your current account without overspending, then setting up a second account for just your monthly bills might work better for you. Of course, if you don't have good financial habits, it might also be wise to consider working on that problem before entering into a mortgage or any other long-term debt...

speac

DennyK,

Thanks, I'm pretty good at managing my money. I think I will set up a separate account for mortgage/bills, just so I can see a little better what proportion of my money is being spent on what.

Thanks for all the advice!

Delta2113

It is recommended that you don't actually bank with your mortgage provider in case you did ever get into any financial difficulty.

adam88

Delta2113 wrote: »

It is recommended that you don't actually bank with your mortgage provider in case you did ever get into any financial difficulty.

What's the thinking behind that????

dennyk

adam88 wrote: »

What's the thinking behind that????

I think the concern is that if your bank account and mortgage are with the same bank and you get behind on your mortgage, the bank could file against you in court and then take money from your account immediately upon receiving court authorization instead of having to wait for you to submit payment yourself to satisfy the judgement. It's even possible they might be able to skip the courts entirely and just take money out of your account to satisfy a loan in arrears, but I don't know if that's legal in Ireland or not.

Whether or not that risk outweighs the better deal and/or faster approval you may be able to get from your current bank as opposed to one with whom you have no history is something you'd have to consider.

Delta2113

I would agree with what you said dennyk.

karenalot

adam88 wrote: »

I have two accounts.

First account is my current account- this receives my wages and immediately I transfer the montly total of all my direct debits plus a few pound extra into my second account which I call my direct debit account. What's left in my current account is what I have to live on each month.

My direct debit account is used to pay all my direct debits and standing orders. There's a debit card attached to it but I don't have clue where it is or the pin of it, this is so that I won't dip into it when I'm running low on funds.

The purpose of this second account is so that if worse comes to worse I know my mortgage, vhi car loans, credit cards, esb etc will be paid. If I only had the one account I know for a fact is end up spending the money I had earmarked for the mortgage

+1

I do the exact same, except I call my second account a bill account. I've had a mortgage the last 10 years and have never worried about bills as they all come out by DD from my second account which has a monthly SO amount put into it. I then live off what's left in my current account. I'd actually find it painful to try pay everything from the one account and constantly wonder if there was enough in it or what I could spend.