What happens when bank shuts down?

Is this guarantee per person or per account? One person can have 4 accounts of 250k. Perhaps they have 4 lots of 250k with 4 different banks. Is the full 1m covered or only 250k?

 

Just keep in mind institutions owned by others will only count as the one ADI.

If you had 250k in Westpac and 250k in St George, only one of these will be covered.

 

So for a family PPOR what do you do if the offset is more then 500k? I understand anything over this amount isn't covered?

 

Reduce the amount to 250k to be covered. I am sure you will be able to find something to do with the extra 250k, maybe pay down debt or something.

 

Did we work out whether offset accounts are in fact covered at all? And what does 'covered' mean for the purpose of offset accounts - does it simply mean you just don't lose the money? Because I could see a scenario where, if a bank collapsed, the guarantee as it relates to offset accounts could just end up ensuring the money can't just disappear into the ether (i.e. the government will guarantee it counts towards your loan, but not that you'll necessarily be able to ever access it again to spend). It's also possible that in the event of a banking collapse, your loan would be onsold, and I'm not sure another bank would have to honour the same loan terms (same interest rate, offset ability and so on).

I could be way off here (maybe what I'm describing would only apply to redraw facilities?), I don't know much about the scheme. Either way if offset accounts are covered it's probably a good idea to only have $250k in there. Be wary of non-bank lenders, too, as these might not be covered at all.

 

Lol.

Spend the money, transfer it to another bank or pay the loan down.

 

Offset accounts are simply savings accounts linked to a loan. Don't see any reason why they would not be covered, but i cannot confirm that they are.

Keep in mind most loan agreements have a clause which enables the mortgagee to take money from any account the borrower has and to use it to pay off a loan.

 

Makes sense, thanks.

 

Join name you covered for 500K so each person 250K