If you have savings it might be time to consider if they could be better placed elsewhere – talk to a mortgage adviser about moving your savings into your mortgage.

But the time to act is now – Britons have already dipped into £11bn worth of ISA cash in the last 12 months, according to Abbey Savings, whose research discovered Britons withdrew almost three times as much compared against the previous 12 months.

In fact, it found that more than 7 million savers have raided their ISA savings with the average saver withdrawing £1,573 in the past 12 months – almost two fifths of those questioned cited general living expenses as the main reason for their withdrawals. This year more than 3 million people have turned to their savings because of redundancy or reduction of income, while unexpected expenses such as home repairs have also forced 5 million Brits to delve into their savings.

Reza Attar-Zadeh, director of savings and investments at Abbey, says: “The sharp increase in the amount that people are withdrawing shows that many of us may have needed our savings to make ends meet, and just goes to highlight the importance of having savings to fall back on.

“There’s no denying it’s been a tough year so it’s understandable that people have turned to their savings in these trying times. It’s vital that we all keep some money aside in the event of an emergency but raiding your ISA account can prove costly in the long term as what you take out you can’t replace.”

The best way to keep your savings and reduce your outgoings is to invest them into an offset mortgage. The money will reduce the amount you have to pay out on your mortgage every month, giving you more breathing space without having to spend a penny – the money is offset against the debt rather than spent on the debt, so it’s still there if you need it. Also, like an ISA, any savings you make from your offset are tax free.

So talk to a mortgage adviser about making the most of your savings. It might seem like there is no alternative but to spend your savings in the downturn, but there could be ways and means to keep your money and reduce your outgoings.

SOURCE: Abbey, 25/09/09

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