The safest home for savings now

poodlediva

It strikes me that the safest home for one's savings at the moment would be in whichever bank holds your mortgage. That way if the bank goes bust you would not lose your savings but just have the mortgage balance reduced accordingly. I have an enormous mortgage with Nationwide which I cannot pay off for 2 years as I'm tied in to a fixed rate. Am I right in thinking that I could put as much as I like into savings there (150k+), safe in the knowledge that if Nationwide went bust then my savings would be offset against my mortgage debt....or would that just be applicable for the first 50k? Does anybody know the answer for sure, as I'm thinking about doing this imminently.

If this isn't a good idea, then why not, and what do you suggest? Northern Rock is closed to new savers now. NS&I offer rubbish rates. I just want a good night's sleep!!!

laineyc_2

That's what we are going to do. We are expecting 2 large sums of money in the next 3-6 months and plan to pay some towards our mortgage and keep the rest in a savings account with our bank.

granville_2

IMO it is not about saving interest rates anymore, it is about keeping your money safe until the financial crisis blows over.

You'll get a better nights sleep with your money in somewhere 100% guaranteed by the government...

Stavros_3

I've just had an e-mail from Prince Nacheema Balonga the 3rd from Zimbabwe. I can't believe my luck, he needs to urgently get his family's riches out of the country before Mugabe seizes it all. Now the best bit. My reward for helping him get his wealth out of Zimbabwe the Prince just needs a few details from me:-
Branch name
Sort code
Account number
User name
Password

I can't believe my luck, I am guaranteed £5million pounds for helping him. Got to go as I have to e-mail him my details urgently so he says. Will get all my MSE's a drink when the brass arrives

Joe65_2

Hearing this idea a lot from people but fear they are mistaken in their assumptions.

AFAIK You'd lose your 150 K (minus 50K hopefully) but still be liable for the balance of your mortgage.
Mortgage debts would be sold on in a 'fire' sale to other institutions (if it hadn't been sold on earlier).

The only way out of your mortage is to pay it off or your own bankruptcy.

laineyc_2

I need to check into this more. I did see Martin on TV recently say that the savings would be deducted from the mortgage. Thanks for the warning.

poodlediva

I feared that might be the case. I guess I really need to know if more than 50k would be offset against the mortgage debt or would they allow the whole lot? Everything I have read on this point is rather unclear. Any ideas where one could clarify this point for sure?

nilrem_2

poodlediva wrote: »

Northern Rock is closed to new savers now.

Where did you get this from? I know they have reduced their rates but I thought they were still offering accounts?
http://www.northernrock.co.uk/savings/

Bernard_Coleslaw

Joe65 wrote: »

Hearing this idea a lot from people but fear they are mistaken in their assumptions.

AFAIK You'd lose your 150 K (minus 50K hopefully) but still be liable for the balance of your mortgage.
Mortgage debts would be sold on in a 'fire' sale to other institutions (if it hadn't been sold on earlier).

The only way out of your mortage is to pay it off or your own bankruptcy.

Not quite. Most banks and building societies have 'set off' arrangements where a customer has both savings and borrowings with them. In the (admittedly unlikely) event of them going bust, the full value of your savings - regardless of the FSCS limit - gets taken off your mortgage balance. So you don't get cash back, but at least you get the full benefit of your savings value, without faffing about with 50k limits.

poodlediva

They are not allowed to have more than 1.5% of the market share of savings accounts. As they were heading that way they have been forced to close doors to all new saving accounts, except for ISAs I believe. This happened a couple of days ago.

laineyc_2

Bernard_Coleslaw wrote: »

Not quite. Most banks and building societies have 'set off' arrangements where a customer has both savings and borrowings with them. In the (admittedly unlikely) event of them going bust, the full value of your savings - regardless of the FSCS limit - gets taken off your mortgage balance. So you don't get cash back, but at least you get the full benefit of your savings value, without faffing about with 50k limits.

That' s wahat I thought from what I have read and seen.