Iain Mac

Just watched a TV programme from last week about the credit crunch and the problems for Northern Rock and others. It mentioned that the Government eventually stepped in to guarantee the full deposits people had with Northern Rock, way in excess of the existing safeguards.

It has made me wonder what would happen if my bank went down:
I have my mortgage in one account and my savings in another, both linked in an offsetting arrangement.
If the bank went down I guess that I'd lose my savings, less the guaranteed amount, but still owe my entire mortgage debt to someone.
As I can draw off the mortgage account at will, if I stuck my savings into the mortgage account, leaving me with no savings but a reduced mortgage, I should be safe in terms of not losing anything? I don't see that having no savings as an issue - as said, I can still access cash from my mortgage.

Anyone know any more about this?

SillyFezzaMk1

iTrader: (1)

I can't see virgin going bump...you normally get a bit of word or rumours flying arround before something major happens; hence the people withdrawing savings from NRock.

But it's wise not to put all of your eggs in one basket even if its just a bit of savings elsewhere just in case.

Dan

Turbosystems

iTrader: (5)

you are best to have the lowest mortgage you can afford no point in having 10k savings in one account netting you 1.6% net after tax when you have 100k mortgage costing you 7%

Bomber

As long as the Bank you have an account with is signed up with the FSA (I think legally ALL UK banks need this) then you are guaranteed to get back 100% of sums up to 35,000 pounds and then something like 90% of anything after that.

So - short story, only put 33,000 pounds (this means that any interest you earn is covered as you are below the 35,0000 limit) into any 1 bank/institution (you need to be careful as some savings accounts are owned by other people: ie: Egg is owned by Abbey Santander).

Spread your savings around if you have more than £35,000 in ONE bank/institution to make sure its 100% safe.

There has been a lot of scaremongering lately with Icelandic/Euro banks reportedly on the brink of collapse - this is (imo) a load of old tat fed to the media by disguntled UK banks who cannot compete with high interest rates and good service. Icelandic banks (for example) have very much less exposure to the Sub-prime market than most (if not all) the UK banks.

If you are still in doubt - see an IFA. There are many that will do a free consultation and offer much better advice than I or anyone on a Car internet forum can supply. (no offence intended to anyone).