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The way most mortgages work is pretty straight forward – you take out a loan with a mortgage lender and over time you repay that loan at a premium. But offset mortgages do not quite work in the same way.

Regular mortgages are secured loans which means they are a money loan secured on a home. That’s why it is quite cheap to borrow hundreds of thousands of pounds – a lender will give someone a loan for 3% or 4% because they know that should that borrow stop paying the mortgage, they can simply take the security, the home, and be reimbursed.

Offset mortgages use this idea and twist it, creating the strangest mortgages in the UK – mortgages that actually help people save money.

Because offset uses that idea of security and builds on it. With an offset mortgage, you secure lump sums of cash alongside the property, in affect making you a safer borrower because the lender knows that should you stop paying your mortgage then there is a property AND a cash lump sum to take back from. So they are happy to offer a cheaper rate, thanks to that added security.

And the more security you amass against the debt, the cheaper the loan becomes.

So if you keep increasing that lump sum, month by month, the rate at which you have to pay back your loan becomes cheaper and cheaper – thus offset is the only mortgage that can save you money each month.

Talk to an offset mortgage adviser about using your savings for more than just the tiny returns they are making right now – invest your home and your money into the strangest and most rewarding mortgage in the UK.

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

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If you are finding it hard to save as much as you’d like you might want to consider taking out an offset loan to help you save more every month while at the same time reducing your mortgage.

It has been hard to save during this economic slump – we might be out of the recession, but according to National Savings & Investments, the British public is now setting aside just 6.25% of their wages – the lowest level since summer 2007. In pounds, average savings have fallen from £90.12 twelve months ago to £81.94.

Only 44% of people say they have been regularly saving any money over the last few months. Over the past five years, this figure has fluctuated between 47% and 55%, so this is one of the lowest ever recorded levels. Also, the amount of money ‘regular’ savers set aside each month has fallen below £200 for the first time in over a year to £195.08.

It’s hard to save when there is little chance of bonuses or raises. But with an offset as you save, you reduce your outgoings for the next month because your mortgage rate has been reduced. So with an offset you can be sure that you will be able to save even more next month even without the promise of more money from your job.

Tim Mack at NS&I says: “With the new financial year approaching, now is a good time for people to take a closer look at their finances and set themselves savings goals for the year ahead.”

SOURCE: NS&I, 03/03/10

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

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More young adults are struggling to get jobs and make ends meet, so they are having to rely on their parents more than ever for support. This can be a real burden on parents – but it needn’t be with an offset mortgage.

According to research from Scottish Widows, adult children are continuing to ‘sap’ their parents’ savings and investments and while the average amount being handed out has increased significantly, the number of parents able to give has fallen. 

Almost half of parents with children over 16 have given or loaned money to their adult children or grandchildren – the average amount given to struggling kids is £13,660, up from £11,800 last year, proof that those parents who are able to give are being forced to give more as their children struggle.

The immediate effect the saving sap fund has had on parents is also alarming – 82% of parents who gave money to family members had to dip into their savings to do so, and worryingly 54% of these do not think they will be able to top that back up.

Iain McGowan, savings expert at Scottish Widows says: “Fewer parents can afford to give or loan money, while those who can, are being asked to provide more. Parents will not only be extremely vulnerable to any unforeseeable circumstances, but the extra handouts to their kids can also affect them in retirement, meaning they may have to work longer, or make their retirement savings stretch further. The earlier parents and children get into the habit of saving the better.”

If you have an offset mortgage, you can take out the lump sum saved against it whenever you need it. It won’t make you more indebted but it will only increase your mortgage rate by a small amount each month. But crucially you will be able to help your kids and keep yourself safe at the same time.

SOURCE: Scottish Widows, 03/03/10

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

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It’s all well and good a mortgage adviser telling you to switch to an offset mortgage but until you release how much you can actually save by just moving around your money you may not be entirely convinced.

Offset mortgages work by taking a lump sum and offsetting it against your mortgage debt – £10,000 offset against a £150,000 mortgage would mean that you only have to pay the interest on £140,000 of the debt, for example.

And that’s a big saving – for example, if you took out a £150,000 offset lifetime tracker deal at 2.39% and made sure to have £10,000 in the offset savings account for the life of the loan then you would save a total of £3,418.

Compare that with £10,000 in a savings account where the rate of interest is less than 1% then it makes sense to go with an offset. Also, interest accrued in a savings account is taxed, but any money saved in an offset is tax free – that’s even more savings.

But that’s not all – in the previous example, not only would you make nearly £3,500 but you would also reduce the life of the mortgage by 1.6 years. So not only can you save more money with an offset mortgage, but you can also reduce the amount of debt you have in your life.

There are so many more benefits to offsetting your money against your mortgage, so ask a professional offset mortgage adviser about some more figures that make offset make sense.

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

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Most people have to get serious about saving money at some point – do it sooner rather than later with an offset mortgage.

Saving money each month allows you to build up a nest egg, gives you a better credit score and gives you a better chance of getting hold of better credit in the future – so the sooner you can begin saving the sooner you can become a better borrower.

It seems as though some people are realising this – the average age for Britons to start saving seriously is 25 years-old, according to new data from National Savings and Investments.

But there are still some people who are simply not able or not willing to save money – more than a fifth of the population say they didn’t start setting money aside in earnest until they were past their 30th birthday, while more than one in ten fail to seriously save until they are 40 years or older. Worryingly, 15% confessed that they had actually never saved at all.

But people are waking up to the benefits of saving thanks to the recent financial crisis. NS&I says one of the main reasons people get serious about saving is after reading stories about how others, without savings, have suffered in an emergency and a third confessed that it was when they suffered a financial shock personally that they began their savings habit. Others began after seeing their parents worrying about not having enough money now and in the future.

It doesn’t matter why you decide to start saving, the important thing is how you do it and how serious you are about putting money aside each month. By using an offset, you are incentivised to save with a reduced mortgage payment each month – so the more you save, the less you pay.

NS&I says: “We’re urging Britons to review their future financial needs and to develop the habit of saving.”

SOURCE: NS&I, 24/02/10

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

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The old adage that ‘if you look after the pennies the pounds will take care of themselves’ may not be true in the 21st century but the message is worth bearing in mind as Brits look for other ways to make their money work for them.

With instant access savings accounts now paying an average of just under 0.75% according to the latest research from moneynet.co.uk, it’s important for consumers to explore alternative savings products in an effort to get a half decent return on their cash.

There are better rates available if you’re prepared to consider putting a regular sum of cash away on a monthly basis. Whilst it may seem like too much hassle, in reality it’s pretty straightforward and a few minutes work can see you handsomely rewarded each month. One of the best vehicles to put the cash in is an offset mortgage – the more you save into the mortgage, the less you pay.

It’s easy to use as well – a good offset mortgage broker will help you link any number of instant or fixed savings accounts or ISAs into the mortgage. So you do not even need to change all your finances to be able to make the most of offset.

If you can save a little each month, maybe £100 or more, it all adds up – on top of your existing savings that extra cash will go towards reducing the rate of your mortgage. By the end of the year you will have found that a chunk of your original repayment rate will have disappeared and your outgoings will have shrunk. Of course if you keep up with the original repayments then you will overpay into your mortgage and will reduce your rate by even more.

Offset works best when it is constantly managed. That isn’t always an easy task and it needs the guidance of a professional offset mortgage adviser, but it is possible and many people in the UK can tell you that it does work.

SOURCE: Moneynet.co.uk, 23/02/10

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

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If you do not feel like you control your own finances and feel like they are in control of you then you need to invest in a mortgage where you are the boss and you call the shots, every month.

It’s a common dilemma to be in – more than half of Britons aged 35 and 45 do not feel fully in control of their finances, according to a new survey commissioned by F&C Investments.

The study found that overall, just under 50% said they felt in control of their finances, with a little over 36% saying they felt a degree of control and 14% saying they did not feel at all in control.

Almost a third of respondents with borrowings were either a little worried about their level of debt or were actually finding it hard to keep up repayments. However, nationwide more than half of respondents had either no borrowings at all, or none apart from their mortgage. Interestingly, almost a third have enough ‘rainy day’ cash on deposit to fund several months’ outgoings.

Scott Stevens, head of global wholesale and marketing at F&C Investments, says: “While some of the results of this survey are encouraging, there is a real need for people in this age group to sort their financial lives out.”

With a flexible offset mortgage, the ball is always in your court. You can decide how much you can afford to save each month, how much to pay and how much money you need to take from your property. Of course, you have to work within the guidelines of the mortgage and within the advice of a good mortgage adviser, but a flexible mortgage does what it says on the tin – it fits around you.

So take control of your finances – make sure you are the boss of your debt, your savings and your outgoings each month by tailoring a flexible offset mortgage around your needs.

SOURCE: F&C, 18/02/10

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

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New research by The Co-operative Bank Mortgages has revealed that almost two thirds of mortgage holders are aiming to be mortgage-free by the time they reach 50 years of age. 

This is a great goal, but one that is tough to make a reality. To do it you need a mortgage that encourages overpayment and actually gets cheaper the more you invest into it – you need an offset mortgage.

To be mortgage-free would be a wonderful thing – the bank found that over half of people would take more holidays, just under a third of people would turn their attention to saving more for retirement and a quarter of people would look to change their working lives by either finishing work or moving to part time hours.

And people are doing it already. Many have been making mortgage overpayments to reduce the term of the mortgage over the last year. Other people are looking to take advantage of the low interest rate environment, and some are looking to have more disposable income as a result of reductions in their mortgage rate. Ask your mortgage adviser about how well their offset mortgage clients are doing right now for an idea of the benefits overpayment can make to your life.

James Hillon, head of mortgages at The Co-operative Bank says: “The research clearly shows that many mortgage holders are looking to take advantage of the low interest rate environment by making overpayments.”

With an offset mortgage, because you can make overpayments and because you can reduce your rate by doing so, it pays to be in a low rate environment and it pays to overpay. It’s exponential as well, because the more you save the cheaper your mortgage rate and the more you have in your pocket at the end of the month, so you have the means to save even more the next month, and the next.

Talk to an offset mortgage adviser about a loan that will help you become mortgage-free. It might seem like a long way off when you are trying to manage a six-figure debt, but with hard work and good advice you can get rid of that responsibility and begin to spend your money on what you want.

SOURCE: Co-Operative Bank, 15/02/10

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

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The key to offset mortgage success is to watch the pennies – if you keep a careful eye on your finances at all times you are bound to save more with an offset loan.

And you’d be amazed at how much the pennies can save you – money.co.uk has revealed that, on average, the nation’s shrapnel savers claim to have £24.54 squirreled away. Incredibly, that means as much as £385m could be stored in almost 16m jars, bottles and piggy banks across the UK – in a savings account that figure would fetch around £12m in gross annual interest and even more if it were to be invested into offset mortgages.

Chris Morling, managing director of money.co.uk, said: “It’s amazing how it all adds up. Twenty five pounds is hardly a king’s ransom when you look at each household in isolation but, together, it seems these penny pots contain a staggering amount of money.

“In fact, it would appear that the total amount ‘saved’ in this way has shot up over the last two years, from £100m in 2007. According to our figures, three times as many households are now ‘watching the pennies’, which explains the rise – perhaps simply because people are more careful with money in tougher times.”

This is just an illustration of how much you can save if you stick to routine, budgets and habits. Offset only works to its full if you invest into it each and every month. It might only be a few pounds each month stashed away in the piggy bank but that all helps towards reducing your debt and reducing your monthly outgoings.

SOURCE: Money.co.uk, 16/02/10

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

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It’s everyone dream – to be debt free and to be able to spend all your money on you and your family rather than on servicing debt. But how is that possible in the 21st century? A good place to start is by taking out an offset mortgage.

An offset mortgage works by using the security of a cash lump sum so as to lower the rate of interest on a mortgage. So if you have a £200,000 mortgage, but have £20,000 in savings then you only have to pay the interest on £180,000 of the debt. That may sound like a lot of interest to pay, but that could be a considerable saving each month and of course, the more you add to the nest egg, the lower the rate.

This means, with some good money management you can overpay on your mortgage. Overpaying is essentially paying too much interest each month, and with some mortgages it is not allowed. But with an offset loan it is encouraged – if you continue to pay what you would have if you were servicing a £200,000 loan rather than pay the cheaper £180,000 rate then that extra money is paid onto the debt, and reduces it.

This takes a good level of money management, and a certain amount of dedication – but to be completely debt free will take both of them and more. Offset just allows it to happen relatively pain-free.

Talk to an offset mortgage expert about what it would take to reduce your mortgage. They will help you organise a budget and will help you project how you would manage with a loan reduction plan. It sounds challenging, but if you are serious about building up your equity then a good offset mortgage expert will help you at every step of the way.

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