Kevin,

We have a mortgage of approx £300K with Woolwich which is offset by £150K of savings with Barclays.
I understand the Woolwich is owned by Barclays so if Barclays was to go bust would the £150K of mortgage debt be cancelled out ?
Thus is having more than £50K in savings this way in an offset mortgage account and ideal and secure way to save money in the current climate ?

Hi bigsalmon

I'm obivously not Kevin but I can answer your query!

If you have loans and savings with the same institution, as is the case with an offset mortgage, and the bank goes bust, your savings would be used to reduce the value of your debt. So just to confirm, rather than get any money refunded through the Financial Services Compensation Scheme your mortgage would be cut to £150K.

Hope that helps

Clare

Excellent, thanks for that. I too am in pretty much the same boat - our mortgage isn't quite as large and neither are our savings, being just under £100k.

But I wonder what happens to a mortage (a normal mortgage, no savings) if a bank 'goes bust' - is it forgotten about (as if...), or does one have to still pay. I ask because if we had our savings and mortgage in separate institutions and (say) they both went bust, then our savings would be 'guaranteed', whilst potentially our mortgage would be written off... Now I don't suppose that is the case at all, and that someone somewhere would pursue every last penny of the mortgage, but I do wonder - and if the 'best case scenario' is true it may well be worth putting the savings elsewhere for a few months (or years?!) until things calm down again.

Many thanks for your help. I just happened upon this forum but its something I have been wondering about for a while now.

Miles