Northern Rock Crisis Article Discussion

Joscar

I understand the need to spread your savings around to avoid exceeding the 35k limit that is protected, but does the 35K apply per individual per bank or building society, if so how are joint accounts dealt with?

What if you have accounts in organisations that are linked? For example if you have savings at Halifax and Sainsburys (which I think are both HBOS) do you get protection of 35k at each? Or would the combined total be considered as one?

handbagqueen

Hi there,

In response to the part of the article about mortgages:
Our 2 year fixed rate mortgage with abbey ends in feb 08. we just put our place on the market as we need to upgrade to a 2 bed. we have a buyer who has done a survey so is just waiting for us to find somewhere (they knew our circumstances), what should we do? The part where ML says we should get going if fixed rate is ending soon has worried me a bit...

caerfai

My daughter has just had an offer accepted on a house she wishes to purchase. Her mortgage broker is putting her with Northern Rock. What do you think? Cannot say I am impressed a I had a discussion with someone at N.R. at the weekend. Did you know they keep the administration fee of almost £400 if a house has fallen through even though no survey took place. You then have 14 days to find another one and will lose the money as it cannot be transferred after that. I told them it was highway robbery. My daughter has quailfied as a teacher and all she can afford is £100,000 and what pokey places can you get for that.

How times have changed, now professional people like her can only afford houses that mill workers lived :money: in years ago. We live in the north.

caerfai

[We are asking the same thing. Note my comments about the fees!

fruit_n_nut

Hi Martin,

We have a fixed flexible mortgage with NR. By making overpayments we've reduced the debt by putting ALL our savings into it. A couple of questions we'd like your view on please.

1. We're effectively using our mortgage as a saving account I guess (£50k). Given whats been in the media right now should we take that money out and put elsewhere for the meantime until this resolves? If things do go badly wrong for NR will we have access to this money?

2. We are considering taking all the equity out of the mortgage (approx £200k) and putting into a higher interest savings account (say 6.25%) versus our fixed rate of 4.94%. This way we should make a profit on the amount and of course still be able to make our monthly repayments. Seems like a simple way of making some money, but are we overlooking any downsides to doing this? BTW I'm a non tax payer so the interest from my savings is the gross rate.

Any thoughts would be really appreciated.

Thanks :beer:

Anna-Maria76

I have just come into the office and was delighted to receive the email from Money Savings Expert.

AT LAST SOMEONE SPEAKING SENSE!!

Fair play to you Martin. I know I'm not a Northern Rock customer and would like to think I would act reasonably on your advice if I was.

Just remember everyone the banks need YOU!

Azx

Joscar

fruit_n_nut wrote: »

Hi Martin,

We are considering taking all the equity out of the mortgage (approx £200k) and putting into a higher interest savings account (say 6.25%) versus our fixed rate of 4.94%. This way we should make a profit on the amount and of course still be able to make our monthly repayments. Seems like a simple way of making some money, but are we overlooking any downsides to doing this? BTW I'm a non tax payer so the interest from my savings is the gross rate.

You may be a non tax payer today, but surely if you gain interest on £200k at 6.25% this will be enough cash to make you a tax payer.

Former_MSE_Dan

Joscar wrote: »

I understand the need to spread your savings around to avoid exceeding the 35k limit that is protected, but does the 35K apply per individual per bank or building society, if so how are joint accounts dealt with?

What if you have accounts in organisations that are linked? For example if you have savings at Halifax and Sainsburys (which I think are both HBOS) do you get protection of 35k at each? Or would the combined total be considered as one?

The following has just been added into our Northern Rock article on this:

"If your cash is in a joint savings account, each saver gets the FSCS coverage. So if a married couple have an account together, 100% of the first £4,000 is protected, then 90% of the next £66,000. As a technical point, this is because the bank assumes the money is equally split between the account holder, unless notified otherwise (so if the balance is £70,000, they’ll treat that as £35,000 each)."


As for your second question, you get the full coverage for each seperately as long as each bank is registered independently with the FSA. So for instance, Abbey and Cahoot work off the same FSA registration, so you only get £35,000 worth of coverage. But Sainsburys is regulated seperatey from the other banks in HBOS, so you can get the full protection on accounts there and in Halifax, say.

Hope this is clear?

tightwadman

I was an investor with Northern Rock until a few hours ago. I wasnt too concerned at first but then;

• I couldnt log on at all to my silver savings account at all for three solid days
• Too many people are trying to put spin on this which only makes me more suspicious - even more so when its politicians!
• The FSA tell us everthing is alright ( They're about as much use as a concrete parachute)

Many of the people in the lines at branches are mature people who can detect bull and lies and know to their cost that politicians are not to be trusted. If they believe their life savings are in danger they have every right to take their money out.

Compensation scheme? what good is that if you have substantial savings over £30,000?

The only way to stop the run on this and any other bank is for a full guarantee to be issued but then only this weekend some big noise from the BOE was writing that this wont happen. So well done BOE, the press and TV for helping to start and spread the panic and making a bad situation worse.

gt94sss2

caerfai wrote: »

My daughter has just had an offer accepted on a house she wishes to purchase. Her mortgage broker is putting her with Northern Rock. What do you think?

If you are borrowing money from Northern Rock you don't need to worry.

At worst, your mortgage will be sold to another bank but your daughter would keep whatever fixed rate deal she has agreed too..

Regards
Sunil