Myth Check: Mortgages in a bank collapse
We take common real estate and housing myths under the microscope and show you what’s actually true.
Myth: “If my bank goes bankrupt, my mortgage simply disappears.”
❌ That's not true.
If your bank fails, your mortgage does not simply disappear. Your mortgage agreement – including the interest rate, term and agreed repayment schedule – generally remains in force under the existing contractual terms.
This is because your bank's claim under the mortgage forms part of its assets and therefore becomes part of the insolvency estate. During the resolution process, the mortgage portfolio is generally transferred to another financial institution. For you, the main change is usually simply who you make your interest and repayment payments to.
One important point to note: if your mortgage is transferred as part of a bank resolution, you generally have no say in choosing the new bank. If you are unhappy with the new provider and wish to switch, the contractual notice and termination conditions still apply.
