Tracker mortgages and any new owner at EBS

PERSONAL FINANCE:Your queries answered

Q

If the EBS is taken over, can the new owners touch tracker mortgages?

- Mr PH, e-mail

A

No they cannot. Your tracker mortgage is a contract – in this case between you and the EBS Building Society. Anyone coming in to the society as a new owner would have to respect existing contracts in the same way that you continue to be obliged to pay off your mortgage regardless of the ownership of the society.

Of course, a new owner could certainly lay down a new policy direction for future mortgage lending but that’s a very different thing.

FINDING A SAFE PLACE FOR OUR SAVINGS

Q

My wife and I need to find a safe place to deposit about €500,000. We are in our 70s and this money is currently mainly with AIB in deposit accounts. The government-backed guarantee covers only the first €100,000, and only until December 2010.

Can we split the sum and spread it in amounts of less than €100,000 over the various banks to ensure that each amount is covered?

- Mr DMcG, e-mail

A

You certainly could. As you say the Eligible Liabilities Guarantee, which is effectively the extension to the original two-year guarantee on bank savings, does run out in December.

In practical terms, what that means is that “on demand” deposits – those which can be withdrawn at any time – are covered only until December 31st. However, term deposits – money which is locked into an account for a fixed term – can be guaranteed for up to five years as long as the deposit is made before December 31st and the money is lodged with a bank or building society that has registered with the Department of Finance as a member of the scheme.

These are: AIB; Anglo Irish Bank; Bank of Ireland; Irish Life & Permanent; EBS Building Society; Irish Nationwide Building Society; and ICS Building Society;

Separately, there is an underlying Deposit Protection Scheme – which existed before the financial crisis ever reached these shores – and which continues to operate. In light of the banking collapse, the terms of this deposit protection scheme have been improved. Up to €100,000 held by you in any one financial institution covered by the scheme will be guaranteed. The thing to note is that the €100,000 threshold is per institution and not per account.

However, the threshold is also per person. Thus, in the case of joint accounts, the amount held in the account is divided by two. This means you could place €200,000 in a single institution in the joint names of you and your wife and it would be fully protected.

Apart from the institutions named above, which are all also covered under the deposit protection scheme, other participating institutions are: ACCBank; Bank of Scotland (Halifax); KBC Bank Ireland; National Irish Bank; Northern Rock; Postbank Ireland; Ulster Bank; and credit unions

In your position, for peace of mind, you should spread your savings in joint accounts across at least three different institutions.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into. Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com