Keep deposits in same institution as mortage?

J

JoeRoberts

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If I keep my deposits in say EBS where I also have a mortage/loans, does this cover me in event of a default on deposits ?

i.e. if I lose my deposits can I set that off against my liability to them.
 
My belief is there is no automatic offset. Most mortgages have an assignment clause that allows the bank to sell on the loan to another institution. Indeed there was a report yesterday that loss making tracker mortgages could be taken off the banks books and sold on at a discount to help the banks loan books. If that happened and the bank then went bust subsequently and the government could not fulfill the deposit guarantee then bye bye savings I think!!!
 
If the bank "defaulted" it would be covered (up to €100K) by the government, if they could not pay it would be protected by the EU. There is a very low likelihood of not being paid on savings under €100K I woudnt worry about it. If you really wanted to you could keep some savings in another account "just in case".

Storys you hear of deposits leaving Irish banks are are large cooperation's who have rules about the ratings of institutions where there funds are held.
 
JoeRoberts, I think if you keep savings in the same bank you have a mortgage with, and that bank goes under, your savings will probably be offset against your mortgage - i.e. your mortgage will be reduced by the amount of your savings but you will have no savings left that you can access for a rainy day. At least, this is what happened to British savers in collapsed Icelandic banks.

So if you don't really need your savings and wouldn't mind offsetting them against your mortgage, it might be a good idea to keep them in the same bank - that way you won't have to go through the hassle of claiming your money under a guarantee and then waiting for a long time to get it. On the other hand, if your do NOT want to have your savings offset against your mortgage, keep them in a different bank. Might be a good idea to split savings between several banks even if they are below 100K - just so that, if one bank fails, you still have access to your savings in the other banks, while waiting for the guarantee to be honoured. People in Britain had to wait for months before they got they deposits in failed Icelandic banks repaid to them, in the meantime having no access to savings at all unless they also had deposits in other banks.

Somehow that aspect - that you'd need to wait quite a while to get your money under a guarantee - isn't given much thought in Ireland at the moment, at least I haven't noticed anybody mentioning it.
 
When a Dutch bank failed last year, mortgages were offset against savings.

Hence, if you do not want the risk of this to happening, it might be worth having your savings and mortgage in 2 different banks.
 
Thanks all - some interesting ideas here.

So to summarise, if one wants to keep deposits in Ireland and also has loans/mortage outstanding > the deposit amount, it is best to have them in one institution.

The worst thing that can happen is that your loan/mortage is repaid immediately up to the value of deposits, so you are not actually losing money (albeit losing access to funds). May hurt people on tracker mortage though.

But you will not lose your deposits.

If this is so, it might be the way to go.
 
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