Savings protection - best advice

DavidRossitter

Hi everyone

Whilst I anticipate the risk of small the current fall out of the subprime market and the ripples it has causing has made me think about savings account protection.

I extended my mortgage some time ago to fund my business- I believe I am disciplined enough to not use it for the wrong purpose and I am presently coming out of the business with the capital and a reasonable return which is presently sitting in a main stream internet account. My short term objective is to keep these funds liquid in a safe place whilst i decide my next step. I dont want to pay off my mortgage early either at this stage.

I wont give real data but for illustration, lets say that I have an offset mortgage of £150,000 with a fixed rate of 4% and £100,000 sitting in a short term online savings account earning near 6%.

Now i know the risk are small but if a building society (for example) caught a cold and went bust then I believe I am protected for the first £2k and 90% up to about £30k. And the rest is as good as gone.

So i feel i should spread my £100k around several different building societys to spread the risk and bring myself under the £30k limit for each.

However would I be better in putting the money all in the offset mortgage? The tax benefits are marginal as I am on a good fixed rate but if said company went bust I would owe them the difference of my mortgage less the savings ie £50,000 - ie is my debt considered as a whole?

Hope that makes sense!

Thanks

Jake'sGran

In The Sunday Times they always seem to be advising people to pay off their mortgages first. I was a bit concerned about what was happening on the stock market and in particular the rumours about N.Rock so I decided to spread my money around a bit into on line easy access accounts paying good rates and also bonds. I have one paying 6.56%. On Working Lunch today they quoted three banks paying excellent rates but I have not seen these three rates advertised anywhere yet. One was the Heritable Bank. If you are interested you could check the WL web site. The info will still be there.

bristolleedsfan

Jake'sGran wrote: »

In The Sunday Times they always seem to be advising people to pay off their mortgages first. I was a bit concerned about what was happening on the stock market and in particular the rumours about N.Rock so I decided to spread my money around a bit into on line easy access accounts paying good rates and also bonds. I have one paying 6.56%. On Working Lunch today they quoted three banks paying excellent rates but I have not seen these three rates advertised anywhere yet. One was the Heritable Bank. If you are interested you could check the WL web site. The info will still be there.

ever since tax relief was removed from morgage interest payments, advice has always been to pay off morgage first, some will say hey we can earn more on savings than we paying on our morgage, this might be true of non SVR morgages , non morgage costs associated with non SVR such as arrangement fees etc should be factored in.

nothing on WL is scientific.

http://www.moneyfacts.co.uk/savings/bestbuys/fixed-rate-savings-accounts.aspx

Steve_Netwriter

Hi,
I think there is one important point about the UK protection scheme. It is per person. So if it a joint account, the protection is twice what you've quoted.

You also need to make sure that each account is with a different bank, not one in the same group.
Steve

sanfly

As for having money with banks in a different group's, maybe it would be a good idea if there was a list of parent banks and subsidiaries, as I'm sure not a lot of people know the relationship between financial institutes and how this effects the compensation scheme....................