Offset and Savings accounts moneys - What if Banks fail or we get a run on the banks

you are answering the wrong question. You are answering what would result from the bank taking your offset.

thats not answering what you are going to do about it now.

The difference? Probability.

kinda surprised people dont understand the difference here.

 

Offset funds are moneys loaned by the borrower to the bank. The bank has a debt to the borrower.

 

I am not sure what I can do, except perhaps put the money back into the mortgage right now, but it took some effort to get those money out to offset (redraw etc) in the first place.

 

That messes up the deductibility. Though if you redrew for it that might be a moot point.

How are you preparing for the lizard alien invasion?

you have to know the probability of a risk and the cost of mitigating it to make an informed decision.

 

Ok I get you now, but I just can't seeing that being the case, especially the legal bit - I could see how they could do that IF you're not paying your debts and have savings with same bank, just taking it for no reason would not be legal in my opinion.

 

I don't understand why would you do this? Do you actually think the bank is going to take your money? It's just not realistically going to happen so try to stop worrying about it for your own sake - if you're truly concerned that this will happen it would be a good idea to get some advice on the matter.
What were the funds for in the first place purchase property or shares or something else?

 

So if the bank went belly up they'd say- she owes $500k and has $500k in offsets, lets call it even. Walk away??

 

Not necessarily, but probably

 

Is that a legal opinion or just your opinion?

 

i may take 2/3rds of it and actually pay down some of the loan, leave the other 3rd liquid.

 

"Types of accounts covered under the Financial Claims Scheme"
Types of accounts covered under the Financial Claims Scheme | APRA

Much more info here :
Financial Claims Scheme | APRA

 

Whats the order of probability, and by how much? That in a recession you might need that money? That the bank cuts redraws? Or that a bank takes your offset balance?

because you are decreasing the negative impact of risk 3, but increasing the negative impact of risks 1 and 2.

why wouldnt you take it all out and stash it under the bed? Buy gold? US treasuries? Put it into 250k chunks into different banks?

risk management has to be rational, not from panic. Sure betting on a number in roulette wins big, but you have to consider the odds.

 

why wouldnt i do all those things ? i figured my answer would be self explanatory - because thats what IM personally most comfortable doing, ie, thats my risk appetite. the 3rd that would be left liquid would see me through a year or two of living expense, though my industry is typically strong during recessions anyway. and the 2/3rds on the loan would just give me peace of mind.

as you say, risk management should be rational, i dont see whats inherently irrational about being comfortable going into uncertain times with a lower debt obligation ?

im not saying im going to do this tomorrow, but if in the future i feel these issues are a real possibility, this would be my course of action

 

Did I say it was a legal opinion?
If a random person on a public forum told you their 'legal opinion' would you take it as fact anyway?

 

some
of you have me worried now. i have my ppor fully offset with rams, thinking of paying mortgage out today or 80% of it at least

 

This is why I am asking, because I dont know the answer. I have asked a few friend in finances, and they said that it had happened before with Greece, its called 'debt rolling?" Where, the debts were taken over by another bank (usually foreign), and the savings written off at the same time.

I was going to use the funds to purchase another property or two depending on the numbers. But now not so sure anymore.

 

Just because its happened before somewhere doesnt give you enough information to assess whether you should do something about it.

property prices have crashed before. Why buy?

 

why!!!

 

Australia is not Greece (obviously) Greece had a whole bunch of issues that we don't have, so comparing our economy to another country is likely not beneficial to your decision making.
If you're worried about a lender taking the cash from you (extremely unlikely) then wouldn't it make sense to put it into another asset class such as property which cannot just be taken by a bank? Just a thought