Savings & Mortgage in the same place

jezzie_bean

I dont know if this question has already been covered; But does anyone know how it would work if I have a £60k mortgage with the same building society as I have £60k savings with & it goes bust does it mean that becasue we are both technically creditors & debtors to each other we are 'quits' ?

I see this as another way of not having to worry about FSCS robustness or the BS stability.

Lokolo

That is correct. So overall you'd be mortgage free with no savings.

Baldur

See FAQ 5 on the FSCS website - http://www.fscs.org.uk/consumer/faqs/deposit_claims_faqs/

jezzie_bean

Many thanks to both, although reading FAQ in detail it states:

"For example, if a depositor had a mortgage of £200,000 and savings of £150,000 with the same bank, set off may be applied by the Insolvency Practitioner dealing with the bank failure."

Aside from what may be covered by the FSCS (£50k) the way the above is written seems to imply it is at the discretion of the Practitioner as to wether the offset will be applied.

I am reading this incorrectly?

Baldur

jezzie_bean wrote: »

I am reading this incorrectly?

It depends how the word 'may' is interpreted.

You have interpreted it in its conditional sense but, in its permissive sense, the sentence could mean that the Insolvency Practitioner can (i.e. has the legal ability to) apply the offset as required, rather than a mandatory obligation to apply it.

There's little doubt that it would be applied where required to meet the insolvent institution's debts.

jezzie_bean

OK - thanks for your help

Bromley86

When I looked into this, it seemed that there were a small number of building societies where the offsetting would not occur. i.e. you'd owe your £60k mortgage to New Provider and have to claim £50k from the FSCS, losing £10k.

Of course, sod's law, I can't find the article that said this.

EDIT: Here it is:

Building societies set different terms and conditions for their offset mortgages, so a customer's savings might or might not be automatically offset against his outstanding mortgage if the building society failed. In the latter case the saver would still have to claim any money back through the FSCS.

http://www.guardian.co.uk/money/2008/sep/21/mortgages.banks