April 13, 2010

Use Offset Mortgages To Help Your Small Business Survive

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

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