Q: We are selling our four-bedroom home after 30 years and moving to an apartment in a more urban location which hopefully will result in lower maintenance costs, less time struggling to tame a large mostly-overgrown garden. Improved access to public transport and proximity to our married children are also factors. .
Thankfully our existing mortgage is quite small at this stage. If all goes to plan there will be a period of at least four months between the closure of the house sale and the completion of the apartment purchase. During the changeover we are staying in a son’s house while he is working on a two year contract in Abu Dhabi.
We are concerned about the sizeable amount of money we will have in the bank for a significant period. It is not many years since the financial meltdown at Anglo Irish Bank and with the Eurozone under threat, Brexit and Trump’s trade wars a sudden bank collapse could wipe us out overnight. Do we have to go through the process of opening up a range of bank accounts in single and joint names to protect our funds until we have to pay the balance on our new apartment? We are confused.
A: Your confusion is understandable. However, there is scope in the Deposit Guarantee Scheme to provide a statutory means of recovering your money in the case of a sudden unexpected bank collapse. In general all retail depositors like yourselves are covered by the Deposit Guarantee Scheme up to €100,000 for a single bank deposit. This means that the amount sitting in your bank account will be repaid up to a €100,000 limit. If it is a joint account and there is €200,000 sitting there then the guarantee applies to each depositor. However if the account is that of a business partnership without legal personality (like a limited company) then €100,000 is the limit of the guarantee.
Temporarily high balances above €100,000 are protected for six months or from the date when they are legally transferable. The kind of balance that would be covered could relate to “the purchase, sale or equity release by the depositor” in relation to a private residential property such as your house.
The Central Bank of Ireland operates the Deposit Guarantee Scheme and pledges to pay out within 20 days up to the end of 2018, 15 working days for 2019 through to December 31, 2020 and within 10 working days from January 1, 2021 to December 31, 2023.
If it was my money joint accounts of less than €200,000 in a number of banks would be my choice.