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Currently no easy access savings accounts and only a handful of bonds pay enough interest to offset the effects of inflation and taxation – in these saver-unfriendly times people need to use more offset mortgages.

According to Moneysupermarket.com, basic rate tax payers will now need an account paying at least 4.26% to gain benefit in real terms from their savings, increasing to 5.67% for higher rate tax payers and 6.81% for 50% taxpayers.

That’s just not going to happen right now using a regular bank or building society savings product. To get those sort of returns you need something that works in low rate and high rate environments. By choosing to offset a savings amount of £30,000 alongside an offset mortgage, Moneysupermarket says borrowers could reduce the term of their mortgage by 4 years and 7 months and save £8,595.27 in mortgage interest.

That’s a huge saving that no one would turn their nose up at. And because the saving comes from a reduced mortgage rate, not interest, there is no tax to pay – with offset, the savings are huge and the taxes are zero.

Kevin Mountford, head of banking at moneysupermarket.com, said: “Over the last few months we have seen inflation rise and fall and it is becoming increasingly difficult for savers to keep an eye on the best way to offset the effects of inflation on savings.

“Now may be the time for consumers to look at alternative ways to make the most of their savings pot. One option of overpaying expensive debts by just a little each month can soon make a big difference to overall sums and now is the time to do it.”

SOURCE: Moneysupermarket.com, 20/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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Inflation rose to 3.4 per cent in March, meaning savers are being hit even harder – so now is the time to get hold of an inflation busting offset mortgage to get some decent savings.

Inflation is almost back to the Consumer Price Index peak of 3.5% witnessed in January this year, however the situation for those savers seeking shelter in fixed rate savings has taken an additional turn for the worse compared with just six months ago. Andrew Hagger of Moneynet.co.uk says the one, four and five year best buy rates have been hit hardest with reductions of 0.75%, 0.65% and 0.65% respectively during the last half year.

Hagger says: “So not only is inflation taking a bigger bite out of savers spending power, the rates on offer have tumbled by up to 19% – for example someone investing £50,000 in a one year bond at 3.95% last October will accrue gross interest of £1975 over the 12 month term compared with just £1600 for someone opting for the current 3.20% today.”

Essentially, the higher inflation is the less your savings are worth. But in an offset mortgage hikes in inflation do not directly affect your money – as long as you keep investing your monthly rate goes down.

So talk to a mortgage adviser about moving your money into an inflation busting mortgage. Before too long inflation may force the Bank of England to raise interest rates, which will affect mortgages. But until then offset could be the best way to beat inflation and make money from your savings.
 
SOURCE: Moneynet.co.uk, 20/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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No matter how small the investment, committing to regular saving over the long term can build a sizeable pot – and with offset, that small pot can help reduce outgoings each month.

Rob Fisher, head of UK personal investments at Fidelity International says: “A monthly investment plan can be a good way to maintain a long-term investment strategy and is a useful way of being disciplined about saving for the future. And you may be surprised at how much even small amounts can grow over a number of years.”

Because many offset loans calculate interest rates daily, you can be sure that every penny you put into your savings pots will go towards a cheaper mortgage rate at the end of the month – which in turn saves you even more money. It might be just £20 or £50 a week, but after a year you could have saved thousands of pounds – all thanks to offset.
 
Of course, the key to successful saving is dedication so learning to not spend what you have put aside is as important as saving – with an offset, the money saved on your mortgage rate each month is incentive enough to not spend.

Talk to a mortgage adviser about how your little investments can make big savings. In this low rate environment and with tax hikes on their way, offset is the single best way to make the most of your money, every month. So ask for an offset and begin planning your regular, manageable contributions.

SOURCE: Fidelity, 12/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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New research from Birmingham Midshires has revealed Brits have almost doubled the amount they are saving on a quarterly basis compared to this time last year – but even more Brits could be doing this with the help of a good offset mortgage.

In the three months to April 2010, Britons saved an average of £1,031, compared with £554 this time last year and £776 during the three months to January 2010. And BM says only two in five British adults admit to raiding their savings during the same period – it says the average raiding amount has reduced to £1,499 from £1,724.

With an offset mortgage loan, the incentive to save rather than spend is huge – if you spend from your savings pots you have a bigger mortgage repayment rate, if you save more that rate goes down. It’s simple, but it’s a great way to help you save more each month.

John Bianco, senior manager at BM Savings says: “It is reassuring to see that people have increased the amount they save for the second quarter in a row, as good saving habits are important to ensure you can plan ahead financially.”

Talk to a mortgage broker about offset mortgages. They will help you search the whole UK offset mortgage market and will show you the loans that would benefit you and make sure you save more than you raid.

SOURCE: BM, 16/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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A recent news report by the Times found that one in five men have a savings account that their partner does not know about, proof that people are hiding their money – to make the most of your family’s assets you need to be open about them and you have to use them to their full in a decent financial vehicle.

The newspaper said husbands and boyfriends are keeping the money a secret because they think their income is none of their partner’s business and some also keep it hidden for safety in case the relationship does not work out.

This is not a financially prudent idea – money need never be a secret issue between couples, in fact those couples who live together can use their joint monies to get hold of a cheaper mortgage through offset.

According to the study, a man’s clandestine savings account contained an average of just over £2,000 – enough to set up a decent nest egg to help you reduce debts each month. And the more that’s saved alongside that will only reduce mortgage payments further.

The report said more than a fifth of male respondents said that they were concerned partners might not approve of their investments – but if they invested in an offset mortgage their partner would be ecstatic because it would mean their monthly obligations are reduced.

Doug Strachan, financial services director at the Post Office, said in the report: “While the recession has been a wake-up call for many, forcing them to rethink their attitude to money and debt, our research shows that many are still making life-changing choices without consulting those closest to them.

“Financial decisions such as taking out a loan or mortgage represent a significant commitment that, in many cases, will affect your life for many years. The fact that one in six people has kept this decision from partners or family is worrying. When it comes to money, being open and honest with family and partners will help keep financial issues under control and ultimately minimise the risk of building up debts and damaging personal relationships.”

SOURCE: The Times, 10/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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There are no savings accounts in the UK giving a positive return after inflation for the new band of 50% taxpayers – for them, offset mortgages might be the best key to success.

Figures from moneysupermarket.com shows that savers and borrowers who fall into the new income tax bracket of 50p in the pound above a certain limit would need a savings account paying at least 7.4% to beat the effects of tax and inflation.

However, for those 50% taxpayers with savings and a mortgage, now could prove the perfect time to consider switching to an offset mortgage deal as a way of providing an alternative to poor paying savings accounts. Unlike a savings account interest is not earned on the balance of the savings pot, instead this pot is offset against the outstanding mortgage balance, reducing the rate each month.

This means the mortgage will be paid off earlier, and the interest paid on the mortgage will be significantly less with no tax payable. Also, the cash balance in the offset account can still be accessed at any time.

Hannah Mercedes-Skenfield, mortgage channel manager at moneysupermarket.com, says: “Many people in the new 50% tax bracket will be looking at ways to limit the impact of both tax and inflation. As a result offset mortgages are an extremely attractive option for borrowers who also have a decent savings pot.”

SOURCE: Moneysupermarket.com, 07/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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Many Brits have pressed on with their life’s plans regardless of the recession, and that’s great, but they should make sure they can continue that with an offset mortgage.

According to Clydesdale and Yorkshire Bank, the majority of people in the UK haven’t let the recession affect their life plans for 2010. They are still getting married, planning a family or setting up a business – the banks say that, contrary to popular belief, the vast majority of people were not deterred from big decisions for 2010.

It says that almost two-thirds of adults say they are even pressing on with holiday plans this year and just 6% said they had decided not to change their car in 2010.

It is good news that people are sticking to their guns, but if they do not have the means to do so they are putting everything at risk – we are not out of the economic woods just yet and rising unemployment still stalks the nation. So if people are going to keep spending they have to have a means to do so safely.

One way is through an offset mortgage. It allows you to save lump sums alongside the mortgage, reducing your rate of repayment. But it also allows you to take out some or all of that lump sum, while at the same time allowing you to be flexible with your rate of repayment. It’s the choice for people who want to be able to do the big things in life, but it demands that these people save as much money as they can in the mean time. It also gives them a financial cushion, should things go wrong.

Steve Reid, retail director, Clydesdale and Yorkshire Banks, said: “The fact people have pressed on with plans for big ‘life events’ such as weddings or having a baby, probably suggests good financial planning, as these events generally allow for a fairly long planning phase.

“This is a good financial lesson in itself. By saving regularly you can build that nest egg for any occasion – particularly those smaller events or unplanned occurrences that can be financially painful. If nothing else, we should all see the benefit of having a financial cushion to fall back on.”

SOURCE: Clydesdale Yorkshire Bank, 03/04/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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Entrepreneurs have pumped in up to £16bn of their own personal savings to get their businesses through the last year, an exercise that would have been a lot less painful with an offset mortgage.

Hiscox has found that one in five small business bosses took the decision to invest, on average, £17,030 of their own savings while one in three slashed their own salary to increase cashflow.

This has been a nightmare for many because that investment has pushed them to the limit. Not only has it used up their nest egg but it may have deprived them of much-needed interest payments to help get them through the month. It also leaves them naked to any further economic business shocks.

If these business owners had an offset mortgage they would have been able to use some of their offset nest egg to pay down debt but at the same time could have reduced or even stopped their mortgage repayments for a short time. This would have given them a much-needed break when dealing with the difficulties of their business.

Offset are designed to be flexible loans, to work around your situation. So when times are good you can overpay on your loan and build your nest egg, only to cash in some of those positive actions if times are tough. This means your mortgage isn’t the boss of you and you can stay boss of your own business.

That’s why offset is such a great mortgage choice – they can bounce back just as your business may bounce back. Hiscox says the very same owners who had to invest so much of their own money are now cautiously optimistic and if they had an offset they could look forward to overpaying and rebuilding their nest egg.

Over half of bosses report feeling positive about the year ahead, and a quarter will even be expanding their businesses in 2010 – and if they had an offset mortgage they would be able to look forward to reduced mortgage payments each month, making their personal life and professional life both a bit brighter.

SOURCE: Hiscox, 30/03/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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It is not just those who are scrimping and saving who could benefit from an offset mortgage – it’s unique properties make them an excellent choice for the wealthy too.

Offset mortgages are a great way of making more from your savings. But they are also a great way of getting round the taxman – because the benefits of offset are not based on interest, you accrue no income tax on what you get out of the mortgage – so you make even more profit, tax-free.

This is why offset mortgages are most cost-effective for higher rate taxpayers – those in the highest tax bands are saving as much as 40% tax by switching over to an offset – they do not have to lose 40% of their savings’ profits because with offset it’s about how small you can make your mortgage repayments, not how much interest you can accrue.

Also, it is these higher earners who are most likely to have the biggest savings, so the benefits are even more pronounced – those who can invest as much as half or more of their property’s worth into an offset will see significant savings each month.

At the start of next month the Government will be increasing income tax to 50% for those earning more than £150,000. So for these highest earners, an offset mortgage can help them avoid even more tax than ever – more savings and less tax makes offset the perfect choice for the wealthiest of Brits.

But just because you are successful in your field and earn a good wage doesn’t mean you know the ins and the outs of the mortgage market. Even if you earn the sort of wages a top Premiership footballer might earn, you still need to talk to an offset mortgage adviser about taking one of these ingenious but complicated mortgages.

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog

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People simply cannot make the money that they need by putting their nest eggs into a savings account in this low rate and high inflation environment.

Even though inflation recently fell to 3%, it is still high, and combined with a low interest rate it means savings accounts are just not good enough. But offset mortgages are still performing well – they are flexible loans so it is you, not the UK economy, that decides how much you can save with them each month.

According to moneysupermarket.com, basic rate tax payers with savings only will now need an account paying at least 3.76% to gain benefit in real terms from their cash, increasing to 5.01% for higher rate tax payers and 6.01% for those higher rate tax payers paying 50% tax from April 6.

If you take a look at the best buy table for savings accounts these rates are nigh on impossible to find. So people are simply not going to make any money from their savings by going down the traditional paths. Kevin Mountford, head of banking at moneysupermarket.com, says: “Despite a fall in inflation, savers are still hard pressed to generate any real returns. There is a danger that many will do nothing because of the belief that there is little point, but this is not the time to be apathetic.”

It certainly isn’t the time to be apathetic. People need to get proactive and find real ways to make their money work for them. One of them is an offset mortgage. Because the savings come through increasing your offset savings pot, it is down to you how much you reduce your outgoings by each month.

So take matters into your own hands and talk to an offset mortgage adviser about quitting the moribund savings market and opting for a financial product that is really helping people now.

SOURCE: Moneysupermarket.com, 23/03/10

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog