Offset Mortgage and Savings Protection

Craig_1988

Hello

Bit of a niche query but I can't seem to get a definitive answer online and want to clarify what the lender told me.

I drewdown an Offset Mortgage with First Direct this week. The mortgage balance is £110k and I have £110k in a Savings Account that is linked to/offsetting the mortgage account (so not paying any interest).

If the bank goes bust what Protection do I have? Understand FSCS covers upto £85k - would the remaining £25k be deducted from the remaining mortgage balance or is it not protected? 

The mortgage is joint with my partner and I am wondering whether it is safer to open a Joint Account to hold some of (or all) the money in for £170k protection.

Many thanks

silvercar

https://www.a-m-i.org.uk/wp-content/uploads/2018/04/Apr-2018-The-right-of-set-off.pdf

I looked into this. Basically you would get 85k back and the remainder set against your borrowing, so the amount above £85 isn't lost, but it would be used to reduce your mortgage rather than given back to you directly.