Safeguarding Offset Savings

16woodstock

Forgive me if this has been asked before:

If I have an offset mortgage for 350K and 300K in a linked savings account, and the bank goes belly up where do I stand? Its a joint account so 170k is safe but what about the rest?

It would be nice to think the bank would say "sorry we've lost your 300K but you owe us 350! give us 50k and we'll call it quits" but I dont suppose that happens.

Thrugelmir

Reduce the mortgage by £130k.

16woodstock

Yes I appreciate what you’re saying but it’s not quite that simple. The mortgage loan was taken out as a remortgage on our existing home with the intention of making a purchase on a 2nd property. Unfortunately we’ve had a few complications along the way and it’s taking a lot longer to complete than anyone could have anticipated. Hopefully in the not to distant future a large chunk of the savings will be used up, so problem solved. In the meantime what happens?

For the future would you recommend remortgaging if and when savings = 170K? Or is there a better solution?

Thrugelmir

If the money is in the offset on a short term basis I wouldn't be overly concerned. As you'll have a few days warning if times do get troubled. In that eventuality transfer the money into the mortgage account.

16woodstock

Obvious really!

getmore4less

THis came up a couple of weeks ago research showed that setoff applies.