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Take years off your mortgage by using savings to the max

SOME OF OUR WRITERS

GEORGE PITCHER The Reverend is a former industrial editor of the Observer. He is the Archbishop of Canterbury’s secretary for public affairs

ESTHER RANTZEN Esther is a legendary consumer rights broadcaster, best known for fronting BBC’s That’s Life

JEFF PRESTRIDGE Jeff is the renowned personal finance editor at the Financial Mail on Sunday

EBY JOHANNA GORNITZKI BY

xisting homeowners are feeling some benefit in these difficult times: with mortgage deals at historically low rates, many have been regularly overpaying on their loan to clear the mortgage early. But those smug mortgage holders may also be disgruntled savers, as the value of their cash savings is eroded by a combination of rising inflation and miserly interest rates. Well, the good news, as we explain on page 36, is that there is a solution that can help on both counts. Offset mortgages help homeowners pay down their debt more quickly by setting their savings against it, so they only pay interest on the balance.

“Additionally, the beauty of offsetting for savers is that they earn interest on their savings at the same rate as they pay on the mortgage,” explains David Black, banking analyst at financial research company Defaqto. They don’t actually receive that interest, because it’s being set against the mortgage interest, but therefore they don’t pay tax on it either – a particular advantage for higherrate and top-rate taxpayers.

Our associate editor Faith is certainly a fan. “I’ve had an offset mortgage for years, and although I don’t have many savings to offset, it’s an extremely flexible arrangement. When I needed to replace the car, I simply went online and reborrowed from the mortgage account – at the same low rate – rather than taking out a separate loan,” she says.

It’s easy to see when you’re losing out on your savings, but it’s much harder to keep tabs on the costs eating into your pension pot. On page 80, we look at the tactics used by some advisers to boost their own coffers, and the impact of high charges on your pension. Finally, there’s little even the savviest Moneywise readers can do about something as mundane as a parking fine… or is there? Find out more on page 51. editor@moneywise.co.uk

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This month’s supplement

Our high street banking scene is having to reinvent itself, as it comes under increasing pressure to provide a service that suits our 21st century lifestyle.

We’re seeing new ways of banking on the move and a growing range of banking products from supermarkets, the arrival of radical ‘back to basics’ bank Metro Bank and innovative alternatives to conventional banking in the shape of social lenders such as Zopa.

It all means a greater choice for the consumer and less opportunity for traditional banks to sit on their laurels.

digital

THE FUTURE OF BANKING

NEW WAYS OF ACCESSING YOUR MONEY IN THE DIGITAL AGE

social lending supermarket banking

PAGE 3: The future of banking PAGE 6: Online safety PAGE 8: Banking apps PAGE 10: New ventures PAGE 13: Social lending

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MONEYWISE O C TO B ER 2 0 1 1 GROUP PERSONAL FINANCE EDITOR Rachel Lacey EDITOR Johanna Gornitzki DEPUTY EDITOR Ruth Jackson ASSOCIATE EDITOR Faith Glasgow SENIOR STAFF WRITER Nathalie Bonney STAFF WRITER Rebecca Rutt

CONTRIBUTORS Sam Barrett, Nick Gibbs, Rob Griffin, Sally Hamilton, George Pitcher, Andrew Pitts, Jeff Prestridge, Esther Rantzen, Cherry Reynard, Laura Staples, Christine Toner, Matthew Wall

ART DIRECTOR Mark Stammers PRODUCTION EDITOR Laura Staples CHIEF EXECUTIVE Tomas Carruthers PUBLISHING DIRECTOR Jeremy King ASSOCIATE PUBLISHER Kay Fox Joyce MARKETING MANAGER Alexandra Kyriakidis ADVERTISING MANAGER Chris Sorrell

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OCTOBER 2011 | MONEYWISE 5