Are your savings safe? article discussion

debbie42

My understanding is that you wouldn't get any savings back via the FSCS scheme as they are being used to directly offset the debt, and overall you still owe 8.5K.

There was a message here that explained it better.

I just found this recent article too, which backs that up, though indicates it may be subject to change.

MuddledOfMiddlesex

Well, I emailed first direct on this point (re offset mortgage deposits in savings schemes that are greater than the amount we'd be compensated for) yesterday morning, and had an email back that utterly missed the point and simply advised me to contact the compensation scheme for more details.

I'd copy it here again except, having read the message, I can't now find a way to review the message now that I've read it once: but it was just a cut and pasted message about the compensation scheme, which didn't address the offset issue at all. It's really annoyed me as I had specified quite clearly that I wanted to know the status of money in the offset accounts, and whether these would simply be used to clear the mortgage debt (obviously reducing liquidity for us but not 'losing' the money itself) or would be swallowed up except for £70K under the compensation scheme (as it's a joint account).

As others have said, common sense suggests we'd be OK. But common sense doesn't seem to be playing much part in the market right now...

Dinah_Gale_2

PS646566, (alias Carey Grant!) Thank you for your response. It sounds as though I should, anyway, be covered up to £28,000 with Anglo Irish.

'Tis all a bit of a gamble at the moment it seems, unless you have government backed savings. Guess I might just as well hang in there, cross my fingers and be happy the interest rate is good.

thanks again, Dinah

jamesd

Fit_like, you're safe but with no FSCS claim. Your savings balance would be eliminated and you'd be left with a 5k mortgage: 80k mortgage - 75k savings = 5k owed to the bank. No chance of loss for you but you might want to remortgage to free up the savings money again.

crockpot, you'd have an 11.5k claim to the FSCS. 30k savings - 18.5k mortgage = 11.5k owed to you and your mortgage would be eliminated also.

WHATAGOAL1

Hi . have read through the posts and think my ? has actually been answered, but i dont really understand some of the terms used like "offset" and others

i have a mortgage with 170000 left to pay (halifax)

i have a savings account with 90000( halifax)

i have a savings account with 80000(lloyds)


would i be best to to close lloyds and put it with the 90000 savings in the halifax?

would be then covered ie if the halifax went bust, they would use savings to clear my mortgage?

Kay_Phillips_2

I've heard that the £35K protection guarantee only applies to total savings within a financial group, not an individual company. In other words if I have £35K in 2 accounts in different banks but both banks are within the same group I only get protection on £35K not £70K. Does anyone know how I can find out which banks and building societies are in which groups?

KP

Patr100

Kay_Phillips wrote: »

I've heard that the £35K protection guarantee only applies to total savings within a financial group, not an individual company. In other words if I have £35K in 2 accounts in different banks but both banks are within the same group I only get protection on £35K not £70K. Does anyone know how I can find out which banks and building societies are in which groups?

KP

Read this
http://www.moneysavingexpert.com/savings/safe-savings

jamesd

WHATAGOAL1, that move would protect all of the money, yes. But you'd be better off using the 35,000 limit in a range of other accounts that have higher interest rates. Alternatively, if your mortgage interest rate is higher than your after tax savings interest rate, you might consider either overpaying on the mortgage or switching to an offset mortgage.

An offset mortgage is one where you have a savings account that pays no interest but instead reduces the amount of mortgage interest you pay by the balance of the savings account. That means that it's effectively a savings account paying tax free interest equal to your mortgage interest rate.

In your case you have enough savings to pay no mortgage interest at all (but get no savings interest either) if you wished. Just don't put more into the offset account than the mortgage balance owed.

You should really consider discussing your situation with an IFA, found from unbiased.co.uk, if you are interested in investment options that might be a more productive use of your money.

HOLLY

I am still really worried .Everybody is talking about 35.000 ,the money in my fixed bond all of my house equity. I stupidly thought i could remove if i found another smaller house, but lose all the interest.
I can't just sit and wait until August. My money is on a world cruise and i can't swim. The Bond is a Telephone Account that i switched from a previous Telephone savings account. There were no papers signed ,and the Terms and Conditions were posted after i had opened it. Also no 14 day cooling off period.
Is there any way i can force BIRMINGHAM MIDSHIRES to return my money.Only then can i invest it safely. I have been with them for 6 years.

jamesd

HOLLY, Barings Bank effectively went bust a few years ago. No saver lost any money at all. Northern Rock you know about, again, no saver lost any money at all. That is what you can expect if Birmingham Midshires/HBOS had similar trouble. It's not guaranteed but it is what you can expect.

You can try asking them and offering to lose all of the interest, getting back just what you started with. They might be willing. Or not. It's their option to let you break your contract with them or not and you losing all of your interest may not be enough to make it wortwhile for them. Now is close to the worst possible time for them to be accepting such requests, so you should not be surprised if they decline: they are supposed to be able to rely on your money being available to them and if they return it to you early they are going to have to borrow it from somewhere else.