Are savings safe in a mortgage offset?
I'm busy taking lots of calls from clients worried about their money, as markets continue to tumble and banks get gobbled up (see earlier entry today). If you're a client and you're worried, please feel free to call me - it might be you need to take action, it might be that everything is fine.
If you have savings in a bank or building society remember that only the first £35,000 of your deposit savings are protected with each institution. So if you had £35,000 with Lloyds and £35,000 with Halifax (HBOS), now that they are the same bank, you should consider transferring to another bank or building society.
If you have an offset mortgage with savings, my understanding is that in the event the lender became insolvent you would only owe the difference between the two amounts. However as some of our clients have over £100,000 in these types of accounts, I've written to the Financial Services Compensation Scheme (FSCS) who are the organisation that provides these deposit guarantees, and asked for some confirmation in writing.
To read the answers to some other related questions such as what if you have a joint account, please click here