This is a very hypothetical question: I have a sum of money overpaid against my mortgage with bank X. Bank X offer a deposit account with attractive interest rate. I have the option to redraw the money from my mortgage and lodge it in this deposit account.
Question: In the event of an out and out collapse of the bank, would the amount of money that I had in the deposit account with the bank be written off against my mortgage. Seeing as my mortgage is an asset to the bank and my deposit money is a liability, because it's with the same bank - my mortgage should be written down by the same amount?
Note: this isn't anything to do with the government banking guarantee.
Question: In the event of an out and out collapse of the bank, would the amount of money that I had in the deposit account with the bank be written off against my mortgage. Seeing as my mortgage is an asset to the bank and my deposit money is a liability, because it's with the same bank - my mortgage should be written down by the same amount?
Note: this isn't anything to do with the government banking guarantee.