Should I pay a deposit off against my mortgage?

[Hen]

I have a large sum on deposit more than will be protected but less than my mortgage, I am quiet happy if they wanted to offset the deposit against the mortgage my worry is if they did not do this and I lose most of my deposit and still owe a hefty mortgage. I understand that institutes can sell on your mortgage so if they have sold it on, does that mean I lose the offset possibility. I currently can not access the deposit as it is a term deposit.

The situation as I understand it is that banks have the right under common law for automatic set-off for current accounts only i.e. if you have two current accounts with the same banking group, they can be set-off against each other. They cannot off-set a credit balance in a deposit account against a debit balance in a current account or a loan account under common law. However, there is nothing to stop banks entering into a contract with customers that allows them to offset all accounts. It is unlikely that any small individual depositor has signed up to this. Therefore, it is unlikely that you will lose all your savings if you have a deposit and a mortgage with the same bank. The bank cannot turn around and offset a deposit account of say €20,000 and a loan account of say €100,000 and tell you that you are you not getting your savings back and you still owe them €80,000.
Here is the link to the article. Its the last one on set-off

 

[Brendan Burgess]

Re: Deposit Guarantee Schemes

Hen

Please hit the "Reply" button when replying to a post and not the "quote" button. That reposts the entire post you are quoting.

As the right to set a deposit off against a mortgage is not clear cut, if you have a substantial deposit and a mortgage, I think it now makes sense to pay the deposit off the mortgage, just in case.

Ask the bank if you can set the deposit off against the mortgage without penalty. They will probably allow you.

Note that this probably does not apply if you have a commercial mortgage as you are getting tax relief on the interest paid.

Brendan

 

[treadstone]

I wonder then about a situation where one has paid a lump sum against a mortgage in an offset manner on the understanding that the lump sum can readily be re-accessed? Just before the current crises I paid over a 100k lump sum against my IIB mortgage when I learned that they provided a 'Current Account Mortage' facility that as I understood it allowed me access the lump sum in the future. I asked for an received a letter stating that could re-access this lump sum on written request at 48 hours notice.
The letter from IIB acknowledging the receipt of payment quoted the mortgage account number rather than any new current account.
I am keen to keep this sum available for a potential business venture, but am concerned that I may not be standing on the firmest of ground as regards reaccessing this cash - do I have cause for this concern?

 

[pennypincher]

I know Brendan has closed a post in relation to what would happen if a bank providing an offset mortgage went bust. I can't find any post with info on the same with particular reference to First Active. Can someone link it here or direct me to this post?
Thanks

 

[Betsy Og]

ditto, if posts are closed for duplication it would be handy to have a link posted to same. & no I'm not the laziest [beep] known to man, I've scooted through all the thread titles, nothing seems to give it away and it could be buried in the bowels of some other discussion.