please hep. offset / savings

rickyrom

Hi all , I will try to make mysef as clear as i can.
I have a mortgage for £150.000 with barclays and I have a total of £80.000 in savings offset againt it.
now, Barclays (Woolwich) allow you up to 12 pots with which can be offset. they have names I.E holiday - bills - car - Mortgage - Christmas, and so on. I have renamed mine Brother, sister, farther as they have borrowed me money to help me through this difficult time, I will have to repay them there money as soon as im back on my feet. ( I don't want to loose there money) each pot has its own account number so does this mean £35.000 is covered in each pot I.E 10 pots x £35000 = £350,000 safe if anything happens to bank.
thank you in advance
Richard

surreysaver

rickyrom wrote: »

Hi all , I will try to make mysef as clear as i can.
I have a mortgage for £150,000 with Barclays and I have a total of £80,000 in savings offset against it.
Now, Barclays (Woolwich) allow you up to 12 pots with which can be offset. They have names i.e. holiday - bills - car - Mortgage - Christmas, and so on. I have renamed mine Brother, sister, father as they have lent me money to help me through this difficult time. I will have to repay them their money as soon as i'm back on my feet. ( I don't want to lose their money) each pot has its own account number so does this mean £35,000 is covered in each pot i.e. 10 pots x £35000 = £350,000 safe if anything happens to bank.
thank you in advance
Richard

I think what you find will happen is your mortgage will reduce by the amount you have in savings. So your £150,000 mortgage will reduce by £80,000, leaving you with a £70,000 mortgage and no savings. So although you will not 'lose' the savings, you will not have access to them either if Barclays went bust.

rickyrom

Ok, so each pot is not protected by the £35,000 level?
or even the whole amount (including all pots) are unprotected by the £35,000 limit.

Shimrod

No it is a limit of £35,000 per institution, not per bank account at that institution.

Locoblade

I can't see the government letting someone as big as Barclays going bust, the worst I can imagine would happen is something like HBOS where they merge with another bank so your accounts etc would pretty much carry on as is, but it would seem on face value that they're OK at the moment anyway judging by the fact they were in talks about buying Lehman Bros before it eventually went down.

If they did go bust though and your mortgage ended up at £70k, you could always remortgage for £150k with another lender to release the £80k savings again, as long as the house is still worth enough to support that size of mortgage.

rickyrom

so would i have £35k out of the £80k secured in offset savings

Locoblade

Nope, you need to remember that overall you still owe them money, so any money you have "saved" will go against the debt you have, therefore overall you'd owe them £70k as a single balance. You now have no savings but a mortgage that's £80k smaller, so in effect you've still kept your whole £80k, and can access it again by remortgaging as mentioned.

dimbo61

No you have all of the first £2000 and then 90% of the next £33,000 so max pay out would be £31700 but as surreysaver has already said if Barclays went bust you would only owe £70,000 on your mortgage and have no savings.
Find something else to worry about !

KiKi

Hi rickyrom

Two things. 'Pots' mean nothing. As someone else said, it's 35K per person, per institution.

However, if you have a debt AND savings with a bank and it went bust, then the savings would be used to pay the debt first before it comes back to you.

In your case, you have a debt (mortgage) of 150,000, and savings of 80,000. So the 80K would be put towards your debt, and you'd be left with a debt of 70,000.

(Although if Barclays went bust and the government didn't bail it out, your debt would be written off anyway.)

The point is that your debt with Barclays outweighs your savings. So they would legitimally be allowed to take your savings and put it all towards the debt, and you'd end up with no savings.

That's the risk with an Offset if a bank goes bust.

But honestly - it is SO SO unlikely that an institution like Barclays would go bust - the government just wouldn't allow it. And if it did, and if the government didn't bail it out, then although you'd lose your savings, your debt would also be written off.

Personally, I would leave it where it is and not worry. But if you are worried, then put 40K in two different savings accounts - just remember, you are saving a HUGE amount of interest on your mortgage by offsetting so moving your savings on a scenario that is SO unlikely isn't worth it, IMO.

HTH you.

KiKi

Locoblade

KiKi wrote: »

The point is that your debt with Barclays outweighs your savings. So they would legitimally be allowed to take your savings and put it all towards the debt, and you'd end up with no savings.

That's the risk with an Offset if a bank goes bust.

Its not a risk really though, as I mentioned above, if that happened and you ended up with a single mortgage owing for £70k, you just remortgage with another lender at £150k and you're back to where you are now, a mortgage for £150k with savings of £80k. The only time its a risk is if the house price drops below say £170k and you can't release all the funds with the remortgage.

KiKi

Hi Locoblade

Yes, I suppose you're right - in fact, I suppose it's actually a lesser risk because you'd lose NO savings at all as they'd be treated as a capital payment on your property!

Thanks for pointing it out.

KiKi