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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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If you opt to consolidate your debts into your current account offset mortgage, you can be sure that you will be able to secure a cheaper mortgage in the future.

While many people think mortgage lenders decide their mortgage applications on the basis of income multiples – where the mortgage amount is decided by multiplying annual incomes – in fact the lenders decide on the basis of ‘affordability’.

This may sound vague, but it means they look at the entire history of a borrower and see how they handled debt in the past. If, for example, the borrower has experience of a high rate, large debt and paid it off properly, he or she will look like a good bet in the eyes of a lender. In turn, if a borrower has missed debt payments in the past or has a history of arrears then the mortgage lender may not think that borrower can handle a mortgage.

So consolidating your debt is a good idea. It limits what you have to pay out each month, and it shows a lender that you can sensibly handle debt. then in the future, when it comes to you applying for a new mortgage or a new credit card, you will find a lender may offer you a cheaper rate.

Talk to a mortgage adviser today about a debt consolidation mortgage where you can incorporate any credit card or loan debt into that deal. You will then pay less out each month in repayment charges, you only have one debt to worry about and you can be sure that lenders will like what they see in the future.

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

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This spring, the amount the population is saving is higher than ever according to National Savings & Investments, proving that in the downturn saving is the very best practice.

On average, NS&I found that Britons are setting aside £92.41 each month, up from £90.12 in winter 2008. Those who regularly save are also putting away £209.23 a month this quarter, the largest amounts since the Government body began measuring saving habits four and a half years ago.

If that £209.23 is being invested wisely, in an offset mortgage for example, the long-term returns will be drastically higher.

This increase in both key measures of the population’s savings comes despite a small drop in income levels over the same period. In fact, across the population, the amount saved as a percentage of income has increased to 6.83% this spring. The number of people saving regularly has also remained constant for the fifth quarter in a row, with nearly half of the population setting some money aside each month.

It’s not just the fact that the UK is saving, but Britons saving by setting themselves the highest savings targets since the NS&I research began in autumn 2004. People ideally want to save £219.11, up from £210.26 last quarter and £195.67 this time last year. This is 16.2% of their average income, compared to 14.99% in spring 2008. People also appear to be keeping more careful control of their spending – less people are saying that they overspent each month, 28% this quarter down from 30% in spring 2008.

So people are planning their financial month more wisely. This is great news – the key to good money management, especially if you are managing an offset, is a careful, reasonable monthly plan.

Dax Harkins, senior savings strategist, NS&I says: “Many of us are cutting back on unnecessary spending and instead are putting a priority on saving, as saving for an emergency continues to be the number one reason for putting money aside. Our survey shows people are setting themselves their highest ever savings targets. However as we’ve seen previously we are still falling a long way short of our aspirations. One way that people could tackle this is to identify clear goals to save for; at the moment just over a quarter of those with savings set aside are saving for something specific.”

SOURCE: NS&I, 24/06/09

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

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An increasing number of Brits are now seeing saving as important but the majority are still simply not saving enough.

Nationwide has found that over a quarter of consumers save nothing at all, with less than half saving regularly. However, more people see the benefit of saving – 60% of people think that saving is an important thing to do.

And people are trying – a significant 60% of Brits admit to saving less than they need to, compared to 56% six months ago. Looking forward, consumers are more confident about their ability to save in the future than at any time since Nationwide began its survey in June 2008 – almost one in every five of consumers think they’ll be saving more than they do now in six months time.

Andy Hutchinson, head of savings at Nationwide, says: “This month’s survey provides further evidence that consumers continue to find the environments enabling them to save are unfavourable. Rising unemployment and falling income growth clearly make it difficult to save, while the low level of interest rates may have increased the incentive to prioritise debt reduction over deposit accumulation. However, it is encouraging to see that there has been an increase in confidence about the future ability to save, which is consistent with recent rises in consumer confidence about the overall economic situation.

“With household financial wealth having fallen significantly as a result of house price and equity market declines, it is more important than ever for consumers to rebuild their savings position for retirement. Initially, increased saving is likely to occur mostly in the form of debt reduction, yet once debt reaches a more sustainable level in relation to incomes, there should be opportunities for households to put more money into deposit savings and other financial assets.”

SOURCE: Nationwide, 17/06/09

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

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The percentage of Brits who say they have no money to save increased from 50% in 2008 to a massive 85% in 2009 as the daily cost of living and the burden of debt increases.

Research from Scottish Widows has revealed that the nation’s savings behaviour is being severely affected by this year’s unprecedented economic environment. The biggest obstacle is the daily cost of living, as 75% believe this is a particular barrier for them. Also, the burden of debt on people’s pockets continues to impact as well, with 42% citing it as a barrier to saving this year, compared to just 32% last year.

Anne Young, savings expert at Scottish Widows says: “The rise in the number of people saying they have no money to save is alarming. It has become more of a priority for people to reduce their current debts and simply get by on a day to day basis rather than saving for their futures.

“However while paying off debts should still be a priority, in climates like these, it is important to save even a small amount now to get into a saving habit and build up some capital. And we should all regularly review what we are doing as our ability to pay debts and save can change.”

For those who have no money to save, almost a third say high taxes are a factor that prevents them from saving. Half of all respondents believe they would be encouraged to save, or begin saving if there were tax relief on all their savings.

There is an answer – offset mortgages. Not only will offset help with debts, but offset is a tax-free savings vehicle. It also offers savings each and every month if money is invested into the mortgage, meaning there is an added incentive to find money, which is all it would take for some people to save that little bit more.

There is no excuse for not saving if you opt for an offset. Money might be tight right now, but saving with an offset means you are saving for yourself and for your future.

SOURCE: Scottish Widows, 01/06/09

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

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On of the best things about offset mortgages is their ability to allow you to not only save in the present, but also save for any future spending.

The new financial landscape means a lot more people have woken up to the fact that the days of ’spend now, pay later’ have gone. Where once just putting something on a credit card or taking out a loan was acceptable, now it is just not viable.

So play the long game if you have expensive pay outs on the horizon. Maybe you want that holiday of a lifetime, maybe you think a new car might be needed in the coming years. You might have children looking towards university, or even looking to get their feet on the first rung of the housing ladder. You may want to pay for an expensive wedding, or fund a future business enterprise. And for all these things there is offset.

Because offset allows you to spend money, just as it allows you to save. Any money accrued alongside your mortgage can be got at as and when you need it. So save now and buy later. Of course, it will affect the rate you pay on your mortgage – the more you take out, the more expensive the rate – but in life sometimes you need to assess what is important, when you should save and when you should spend.

But to make a success of your offset plans, you need to get some professional advice. Talk to a mortgage adviser about how your long term plans fit with an offset mortgage. Look at how much you can save, how much you need to save and how much it will cost you to fund your ideas and plans. It’s a tricky task, but no one knows offset loans quite like a mortgage professional.

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

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If you are thinking about offset you have to be ready to become the ultimate, disciplined borrower – which could mean a whole new way of borrowing and saving.

Offset works best when you keep saving. But saving every month is tough – if you are only being asked to pay £500 a month for your mortgage interest payments, would you have the discipline to pay £600, or even £800? It’s tough, but that’s how offset works.

Without the discipline, offset essentially becomes an interest-only mortgage, which means you will find it a lot harder to pay off. Also, offset rates, without the saving, aren’t the best rates. They rely on investment and flexible payment, so you have to be sure you can feed your mortgage month after month.

That means asking your adviser to help you put together a plan that will help you save, and help you feed your offset mortgage. An adviser will help you strike a balance between saving just enough and not over-stretching yourself – an adviser may even introduce you to other products that will help you save, like ISAs and investment vehicles.

But at the end of the day, you are in charge of your offset. You have to push yourself and be as disciplined every single month. But the rewards are worth it – savings in your pocket, which are tax-free, every single month. You will also find that your credit score rockets and your mortgage loan decreases.

Nothing pushes people like the incentive of saving and the incentive of debt reduction. And offset can offer that, albeit with some sacrifice. Ask your adviser for help and ask them to outline what offset will exactly be worth to you.

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

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Yorkshire building society has found that its offset products are very popular with parents wanting to help out their children with mortgage payments.

Some offset mortgages enable family members or friends to link their savings account to the borrower’s offset mortgage. No interest is paid to the saver but any savings put towards an offset mortgage will be helping the borrower to pay less every month or to reduce the term of their mortgage considerably, for very little sacrifice of savings interest.

This is the modern Bank of Mum and Dad, where parents can help their kids onto the property ladder in a sensible way. And, when the kids can stand on their own two feet, Mum and Dad will not have spent a penny.

Chris Edwards, head of mortgages and savings at Yorkshire says: “With interest rates at an all time low it’s great news that customers are realising the benefits of offsetting savings to their mortgage. The success we are seeing with our offset account doesn’t surprise me as it’s a really good way to help a family member or friend with their mortgage without having to hand over large sums of money.

“With offset, the money is not actually given to the borrower, instead it is deposited into the saver’s separate savings account, which is linked to the offset mortgage. The saver retains full control of their money and is able to make withdrawals and deposits at anytime in the usual way.

“Offsetting is also very tax-efficient, especially for higher-rate taxpayers as savers don’t earn any interest on their savings so they do not pay any tax on their offset plus savings either.”

SOURCE: Yorkshire, 21/05/09

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

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If you have come into a lot of money one of your first thoughts may have been to pay off your mortgage as soon as you can – but is that the best decision?

Windfalls do not come around very often, and when they do come along, you have to be very careful about how you spend your money. So paying off your mortgage would seem like a really sensible idea? No more monthly payments, 100% security for life and a definite asset that can be passed on to your family. It’s the ultimate dream, but is it the right choice for your lump sum?

Because if you pay off your mortgage, and your home depreciates, you have lost some of your money. Also, what if something happens and you need money fast? It will take time to seek out another mortgage and unlock some of the cash again. Paying off your mortgage means locking your money into your home.

However there is an alternative. By offsetting a lump sum against your mortgage, you in affect pay off the debt, but you keep your money close to hand. For example, if you offset enough against your mortgage you may end up paying very, very little for your mortgage each month. But the money doesn’t depreciate, it is always accessible and you are still 100% safe and secure.

There is no right answer when it comes to investing money with your mortgage. It might not be the right choice for everyone, but then again it might be a great way of securing your money and reducing your costs.

The only person who can give you the right answer is a fully qualified mortgage adviser. They will be able to point you in the right direction when it comes to financial products and they will do it by assessing you first. Then they fit the finances round your needs.

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

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In the current belt-tightening climate, just under three-quarters of UK adults are getting ever the more thrifty to get by during the credit crunch, understanding that pennies make pounds when it comes to saving, little by little.

uSwitch.com has found that many consumers are doing all they can to save the pennies – from cutting their own hair to making the most of discount vouchers that many restaurants are now offering. What’s more, for 24.9 million UK consumers, every penny does indeed count, with many stashing their small change, amounting to a total of £1bn, in adult piggy banks, instead of letting it disappear down the back of the sofa.

The research reveals that Brits are becoming a nation of penny pinchers to see them through the current recessionary climate. Over a third of UK adults admit that that they are much more likely to stoop for small change they happen across in the street than they were a year ago. Just under half would happily pocket a single penny if they came across one when out and about.

Louise Bond, personal finance manager at uSwitch.com, says: “The economic slump has created an epidemic of ‘bag a bargain’ consumers, all taking measures to recession-proof their pockets. No one knows how long the recession will last and battening down the financial hatches in the short term will ensure that consumers are best positioned to weather the recession in the long run.”

There is nothing wrong with having a saving mentality. The more you tend to save, the easier it becomes. It may only be pennies at first, but pennies lead to billions, as uSwitch’s evidence suggests.

SOURCE: uSwitch.com, 29/04/09

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