Annual house prices have reached positive figures for the first time in nearly two years as Brits finally see their homes increase in value over the longer term.

According to Nationwide, UK house prices in October were higher than those in October 2008 – the first annual rise for 19 months. Overall, property prices were 2% higher in October than in the same month last year, with the average home now costing £162,038.

So equity is rising, slowly. Over the last two years people have seen their house prices plummet, and those with offset mortgages have seen their offset lump sums become less influential – a larger proportional mortgage means your rate increases if your lump sum does not.

But now the tide is turning. Those who have struggled with their offset mortgage are now seeing their lump sum slowly come into the fore – their mortgage is shrinking, but their lump sum isn’t and as a result rates are getting smaller.

So if you have an offset, talk to a mortgage adviser about your options now. You may benefit from a remortgage, you may benefit  from using some more of your savings to increase your lump sum. A mortgage adviser can take you through all the different potential mortgage scenarios with you and help you come to a decision that will save you money.

Alternatively, if you have some savings and want them to make a difference, it might be worth looking at an offset loan while prices are depressed. It might be time for you to also talk to a mortgage adviser and see whether an offset loan could benefit you. If you get the right deal, and use your money as you should, you could see your offset cash do wonders over the next year as house prices hopefully carry on increasing.

SOURCE: Nationwide, 30/10/09

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