How safe is an offset mortgage account?

Bob_V

Hi,

I don't know if someone out there might help me with this little dilemma. My father recently died leaving me an inheritamce of almost exactly the same as my mortgage (£120k). Anticipating this I recently changed my mortgage to a good deal that one of the smaller building societies was offering. Part of the deal was an offset savings account where you can put money to offset the mortgage. The money in the savings account does not earn any interest merely stops me having to pay mortgage repayments on the amount in there. The reason I didnt merely pay off my mortgage was that I am intending to buy a holiday property at some stage and I didn't want to go through the hassle of arranging another mortgage.

I pay tax at 40% - my wife does not pay any tax as she is not working.

My worry is this. If I put all my inheritance in the offset account (approx £120k) would I lose money if the building society went under? I'm not sure because it would seem to me that if I owe them £120k (the mortgage agreement) but they then owe me £120k because they go under would this be all debts cancelled out or would the receiver come to me for the mortgage owed first and leave the money they owe me (money in the savings account) to last - in other words I lose my money.

Or am I being paranoid

Thanks for any help - Bob

ziknik

http://forums.moneysavingexpert.com/showthread.html?t=1014921

Double post