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The media loves to report house prices rises and dips – it’s easy news and most people are affected by it – but what does it mean to an offset mortgage if house prices rise?

Prices fell heavy in 2008, but through most of 2009 they seem to have improved somewhat and that improvement seems like it is set to continue into 2010 – Halifax found that UK house prices were 1.1% higher in December than in December 2008 – the first annual rise since March 2008.

Prices rose by 1% in December compared with the previous month, marking the sixth consecutive monthly rise according to the bank – it says the average home is now worth £169,042. This number has risen by 9.4% – or £14,552 – from the trough of April 2009, the bottom of a 23% decline from August 2007.

So what does this mean for someone with an offset mortgage? Simply it means that your offset savings do even more. Consider this – an offset mortgage of £100,000 costs someone with £20,000 of savings the same as a mortgage of £80,000. But if another £14,552 has been wiped off the debt, it feels as though the offset borrower is paying off a mortgage of less than £66,000.

So for offset mortgage holders, hikes in house prices make their money work harder. It’s all about relative comparisons and the more equity you have in a home, the more your money does to reduce your monthly outgoings. While some people only enjoy increased equity as their house price increases, offset borrowers get a double whammy of cheaper rates and a smaller debt.

So talk to your mortgage broker about taking out a loan that offers more than most. Offset mortgages are the most innovative loans on the market and do more for their holders than any other home loan. So don’t delay, take advantage of house price rises today.

SOURCE: Halifax, 07/01/10

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

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Two recent house price indexes have found the UK property market to be regaining a little momentum with continued price increases – but what does this mean to offset borrowers?

The latest house price index from Nationwide found that house prices increased by 1.6% in August this year, the fourth month in a row that house prices have increased. It also found that year-on-year figures show that house prices are less than 3% down on what they were 12 months ago – meaning prices are likely to be back in the black by the end of 2009.

Also, the Land Registry found that house prices had increased by 1.7% in July, the largest amount its index has jumped in a single month for five years.

So what does this all mean for you? Well simply, it means you have more money to play with – as equity in your home increases, so does your lump sum’s potential. Since the credit crunch began, people who have been investing into their offset have been seeing their saved lump sums mean less as house prices crumble.

But now, as prices begin to slowly rise, they can be safe in the knowledge that their lump sums are doing even more – the bigger percentage of your home you own, the less you owe, which means your offset has a bigger affect on your remaining mortgage.

So while we are not out of the woods yet – the Land Registry, whose data collection differs from Nationwide says year-on-year house prices are still nearly 12% down on prices 12 months ago – house prices are rising. This will hopefully get more offset mortgage holders saving as they begin to see even better returns from their investment.

SOURCE: Nationwide, 26/08/09, Land Registry, 28/08/09

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

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More than four million home-owners are playing a waiting game, watching the fluctuating property market with an eagle eye so they can cash in on cheaper home-ownership before prices start to rise.

According to research from First Direct, UK homeowners waiting for the right moment to ‘trade up’ their houses are now sitting on a savings pot of £20.2bn, which is ready to be ploughed into the housing market when the time is right – the average Brit expects that time could be as soon as October 2010.

But the waiting game has an emotional impact on the nation – a quarter feel lucky to be able to take advantage of a falling market and snap up houses while prices are low. Close to one in five are thrilled at the prospect of nabbing a bargain. However, for 20% of the nation, the waiting game is forcing them to postpone major life decisions such as marriage and children – and 12%  feel that they will never make it on to the property ladder with prices as they stand.

A spokesman for First Direct says: “If property is your preferred investment, it’s worth existing home-owners investigating offset mortgages as a savings option while they wait for the right time to invest.  With savings accounts paying such low rates of interest at the moment, offsets are looking particularly attractive.

“Swapping to an offset mortgage could cut down the length of a £100,000 25 year mortgage by almost three years and save £18,322 in interest payments over the lifetime of the mortgage.”

Sitting on a fortune may not be the right choice. Taking out an offset mortgage now, either on your existing property or on a new home, will start saving you money immediately – so even if house prices fall a bit more, you know you are making savings regardless. Then when the market returns later this year then you will be making a profit as your house price inflates alongside the generous monthly savings an offset mortgage can bring.

SOURCE: First Direct, 16/04/09

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