Lenders could raid nest eggs of borrowers who fall behind on their mortgages

Published 21st Jan 2009

Those who have their mortgage and savings with the same bank or lender could find their savings dipped into if they fall behind with repayments.

Banks have the right to set off your borrowings against your savings if you fail to meet your debt repayments.

Normally they would do this only if they could not come to a solution with you and after they'd issued a final letter of demand, according to the British Bankers' Association. This is usually after three months of arrears. But if you ignore their letters, it could be sooner, so do keep in touch with your lender.

But if your home loan is in only one name, the bank cannot take money from a joint account to meet the repayments.

However, if the mortgage is in joint names, it can move over savings from an account in a single name as you are liable for repayments individually as well as together.

This could prove a major concern for those battling with debts or worried about losing their job. If you are made redundant, help with your mortgage is available from the Government through its Income Support for Mortgage Interest (ISMI) scheme. This month, changes were introduced to improve it, but there are still serious limitations.

Those who are out of work and have savings of more than £16,000 or have a partner working more than 24 hours a week will not qualify for help. You also have to be eligible for the Job Seekers' Allowance to claim it.

Those who qualify for ISMI have to wait 13 weeks before receiving help with their mortgage.

Source: ' 'Daily Mail' '

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