Mortgage and Savings in one bank query

[Daddy]

Take this scenario:

Mortgage 200k

Savings 100k

In same institution.

Worst case scenario bank goes bust or country goes bust and suppose the Govt cannot pay the savings of 100k to me under the guarantee scheme.

Do I then owe the bank a net 100k or do I lose my 100k savings and still owe the bank the 200k ?

 

[North Star]

From what I understand you are correct in that you cant offset the mortgage against the savings and owe a net 100k. In a case when the bank goes bust the administrator would look to recover the 200k loan and you would have no gaurantee of recovering the 100k deposit through the liquidation process. Just to be certain, call your bank mananger and get them to confirm this. Regards

 

[irishlinks]

...and you would have no gaurantee of recovering the 100k deposit through the liquidation process.

But we have the government guarantee at the moment - so there "should" be no problem with that? (Unless of course the government can't back up the guarantee)

 

[Omega]

.....Do I then owe the bank a net 100k or do I lose my 100k savings and still owe the bank the 200k?.....

It's impossible to say. It would depend on the fine print of the mortgage contract - which probably bears no direct offset relationship to any savings in the same bank. Anyway, in such an event, emergency legislation could be enacted to do almost anything - and it probably won't be to our advantage. I'm not sure what happened in the Argentina scenario, except that savings values were slashed overnight - even those in USD denominated accounts (). Personally, I would take the cautious view and assuming the worst, would try to get the savings to a "safe" place, either at home or abroad - but where?

 

[North Star]

But we have the government guarantee at the moment - so there "should" be no problem with that? (Unless of course the government can't back up the guarantee)

Agreed, but the original post was based on the risk that the Govt cant pay the savings that were guaranteed.

 

[Daddy]

I suppose perhaps one way to circumvent my position at NIB would be to take out an offset mortgage.

Thanks for replies and I will check with the NIB on this.

 

[Eblanoid]

I suppose perhaps one way to circumvent my position at NIB would be to take out an offset mortgage.

Thanks for replies and I will check with the NIB on this.

NIB is a Danish bank, not an Irish one, so it's covered by the Danish government's deposit guarantee scheme in addition to the banana republic's one.

http://www.itsyourmoney.ie/index.jsp?1nID=100&nID=153&aID=620