What happens to your redraw if the bank falls over?

[ok180]

Hi all,

A rather depressing question for you in these times of doom and gloom.

I have a mortgage with xxx amount of redraw in the account. What happens to this if the wholesale lender i'm with goes belly up? I know another bank comes in to take over the loan (i would hope) but what about the money sitting in redraw? Would the new loan be reduced by what was already paid down? I guess all of us with some amount of redraw are starting to wonder the same thing.

I ask the question because this lender seems to be having some problems with its mortgage fund, accounts are frozen for the time being.

 

[moyjos]

My first thought was get your money out and park it in ING or somewhere
then I read your line

accounts are frozen

Buggar

 

[ok180]

The redraw isnt frozen on mortgages... i dont think.

It's the mortgage funds that are frozen. The ones where they give you 9.% plus per annum on your money.

see:

http://www.news.com.au/business/story/0,27753,24544653-5017672,00.html

Anyone who with a non bank lender who has these funds is in danger.

 

[The Y-man]

I have a mortgage with xxx amount of redraw in the account. What happens to this if the wholesale lender i'm with goes belly up? I know another bank comes in to take over the loan (i would hope) but what about the money sitting in redraw? .

Worst case: another bank may NOT come in to take over. At this point, you need to pay back the loan completely. The good thing is, your redraw amount will reduce the amount you owe to the administrators.

Cheers,

The Y-man