Scots must return to the traditional values of thrift and prudence according to a new report from Aegon – values that are core to the benefits of offset mortgages.

A major study of Scottish savings habits conducted by Aegon has found evidence of worryingly low levels of short-term saving, even in higher income groups. More than four out of ten households have no savings or investments and the figure only rises to just under a quarter in households earning over £30,000 a year.

It is generally accepted people of working age should have ‘rainy day’ savings of between three and six months of expenditure of earnings – but these findings suggest many Scots fall far short of having this financial cushion. It’s a cushion that can be easy achieved and more importantly maintained with an offset mortgage. By offsetting money against the home loan, rates are reduced and more money can be saved and reinvested, every month.

Also, the report indicates retired Scots have been less successful than their English counterparts in saving for a pension as a significantly higher proportion of Scottish pensioners claim Pension Credit than in other parts of Great Britain. Again, offset can solve this problem – many people do not save in a pension, but building a nest egg with an offset can be a great way to start building up a long-term financial pot.

Stewart Ritchie, a former Aegon director who helped put together the report, says: “It’s time to return to the traditional Scottish values of thrift and prudence. Scots haven’t been putting away enough money in the good years and there’s a clear evidence of a worrying lack of ‘rainy day’ savings. This doesn’t bode well for those who lose their jobs in the current recession.

“For too long people have relied on an expectation houses will go up in value and stocks and shares will rise and that capital gain will therefore provide them with retirement savings. The credit crunch has shown this to be a dangerous assumption. Scots have to get used to the idea that the easy path to wealth through capital gain will have to be replaced by a return to more traditional savings habits.”

Offset can help Scots save. It can help English people save, and it can also help Welsh and Northern Irish people save – in fact, offset can help people put money away every week from all corners of the United Kingdom. So whatever corner of the country you are from, talk to a mortgage adviser about saving with offset.

SOURCE: Aegon, 02/11/09

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