£50000 compensation rule change

ajbell

Hi.
Just read that the £50000 compensation on savings is reduced if you have a loan or mortgage with the same bank or building society. I can't figure out if you lose on this or not. If the loan or mortgage is wiped out when the bank/building society goes bust then it doesn't matter as you don't owe the money any more. I am with the Nationwide and have around £38000 in savings and a mortgage of £35000, can anyone tell me where i stand?.

Andy.

Baldur

ajbell wrote: »

If the loan or mortgage is wiped out when the bank/building society goes bust then it doesn't matter as you don't owe the money any more. I am with the Nationwide and have around £38000 in savings and a mortgage of £35000, can anyone tell me where i stand?

In the unlikely event that NW ceased trading, you would receive £3,000 - the £35k mortgage being paid off to the liquidators or purchasers of the assets of the failed institution.

ajbell

So i would not lose then?.

Baldur

ajbell wrote: »

So i would not lose then?.

As I said, "you would receive £3,000"

ajbell

Ok, so why have various experts adviced that you have your mortgage and savings in seperate banks/building societys if there is no net loss.

Baldur

ajbell wrote: »

Ok, so why have various experts adviced that you have your mortgage and savings in seperate banks/building societys if there is no net loss.

So that (in your case) the £35,000 to pay off the mortgage can't be grabbed from your savings - fairly obvious, I'd have thought,

ajbell

But the net result is the same, thats what i can't understand.

Baldur

ajbell wrote: »

But the net result is the same, thats what i can't understand.

Hardly, you would just carry on with your normal mortgage payments if the savings funds were with a different institution - and keep your savings intact.

Lokolo

Jeez.

Ok YOU HAVE A £35k MORTGAGE WITH BANK A. Got it?!

You have £38k SAVINGS WITH BANK B. Got that?

If BANK A DIES, THEY WON'T TAKE YOUR SAVINGS FROM BANK B!!!!!!!!

If you have both savings and mortgage with Bank A or B, they will take your savings!!!

ajbell

But the net result is that i have £3000 whichever way.

PasturesNew

That's the point. That you don't lose out.

In the scenario you gave, you could get a new mortgage for £35k from another bank and put that money back into your savings pot. So you'd also be back to square one.

The whole point is: that people don't lose money.