Bank wont help in any way - Thanks for nothing

From: Denise Macadam


Hello All,
I read the post from Les on the 18th with great interest as i was in a similar situation myself. I am selling my PPR and moving into the Ip due to redundancy, currently doing some renos to my home and will do the same to the Ip when we move in, reno and on sell. The Ip is almost vacant and I can only offer the next lease for three months (due to my moving into it) so little chance for rental, have also reduced the rent for short term letting in the hope of making it a more attractive proposition. The mortgage on this is $1650. and then I have the PPR mortgage, so things are very tight until I sell and need a bit of breathing space money wise. So, watching all the "Money" shows etc i did what was always advised, wrote to the lender on Friday and explained the situation.
Asked for details on how I can go about reducing or delaying payment on one or both mortgages for a short time until my house is on the market. Explained I would walk away with $300,000 which pays out my IP loan. Was actually thinking off holding about $35,000 for extensions etc but it would still leave a very small mortgage, certainly manageable on my husbands wage if I am still not employed by then. So armed with the info from Les, (most helpful) I did the sums and was ready to talk to someone about my options. Received a call Monday from the credit manager at head office to say they had received my letter, thank you for advising us - I thought this sounds good he is going to help me out a little. I asked what I needed to do and who i should see. "No one" he said - sorry, nothing we can do for you, keep paying full amount on both loans until you sell your house. Oh said I, if i could keep paying full amounts on both why would I be contacting you in the first place, after more conversation he said due to the nature of the loans we cant help you. One a line of credit against PPR - the other a fixed I&P loan against the Ip, I couldn't see how this was different from probably the majority of loans on issue. I advised the bank valuation on both homes came in at over $800,000 10 months ago, and I owed $460,000. "Oh really", sorry cant help you at all, due to the nature of the loans, there is nothing we can do. I advised there was something I could do - as soon as I move I would be looking for another lender, that i was very disappointed with their approach. So i guess that is another lesson, when looking for finance, look at the worst case scenario and see how flexible the lender is in times such as these as they can happen when you really least expect it. I will be renovating and selling as my "job" but i sure as hell wont be using my current Building Society in Brisbane a day longer than necessary.
Another "learning experience" I just wish they didn't have so many dollar signs in front of them!
Looking forward to hearing your outcome Les,
Denise
 
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Reply: 1
From: Les .



G'day Denise,

Sounds like they are running true to form, eh? Did they explain what "nature of the loans" meant?

Maybe time for a bit of "out of the square" thinking.

1. If you DIDN'T sell your PPOR, and rented the IP, could you survive?
2. You're in Brisbane, so are the values continuing to grow on both properties?
3. What returns would you get if you RENTED both, and rented a property for yourself for a year or two? Could you then "survive"?
4. Obviously the selling of your PPOR will release a nice bunch of CGT-free cash - but you don't want to sell at "Fire Sale" prices, so:-
a. Can you plan to rent yourself, rent out your IP now, and make the payments using a credit card to pick up the difference until your PPOR settles?
b. Can the renovations be postponed until some time in the future - or will this hugely affect the rental return?
c. Can the IP be furnished (from Garage Sales, good quality furniture) and return a better rental to you?

Other points:-
Your IP has a Fixed Loan - be careful of "breaking out" of that - they could rip your other arm off!!! But, when the Fixed Rate time is up, look at changing it to IO if is remaining as an IP.

Could you take in a boarder while you stay in PPOR and re-rent your IP? Any other way to increase cashflow temporarily? Could you rent out BOTH properties, rent yourself, AND take in a boarder where you are renting?

I guess my suggestions are based what CAN you do to turn this broken egg into an omelette? Prepare yourself to do whatever you need to, to make your future better.

Breaking Fixed Loans costs dearly - don't do that unless absolutely necessary. Credit cards are often maligned, but a short term borrowing might give you breathing space to have your other ideas come to fruit.

And, as we know now ;^) NOT paying the mortgage on time leads to hobnailed boots tromping all over you, so don't let that happen.

Other options? Are there other investors you know can loan you a small amount (and pay them credit card rates for 2 - 3 months to tide you over?) If not an investor, how about Mum and Pop, or Grandma/Granddad? They are probably getting a generous 3% on their cash - what would YOU pay them to borrow a little to help you out?

Don't give up, mate (it hurts too much) - endure the short-term pain to make things MUCH better for you into the future - and that might only be 3 months away.

Good luck,


Les


- "Eschew Obfuscation" - ;^)
 
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Reply: 1.1
From: Chris L


Hi Denise,

I'm going to start new loans soon for PPOR and IP and would like to know which building society isn't very friendly, as I'm in Brisbane also.
Could you advise, I wouldn't like to start with the someone that does this to a customer in need.

Thanks Chris
 
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Reply: 1.1.1
From: Denise Macadam


Hello Chris,
The not so friendly Society is Heritage, hope you do well with your finance.

Les
Wonderful insightful reply and thank you - i am in thinking mode at present and had thought along the same lines as some of your suggestions. The PPR is definitely going, that will put me in freedom mode immediately and pay off everything - owe nothing and have quite a bit of cash. You are right about the prices in Brisbane having soared and I am lucky to have both places in the "A1" suburb for this, hubby is in R.E. in same area so will not be giving anything away, just the opposite. The renos on PPR have been tightly controlled and will return me $2 - for $1 spent. Have also taught me so much ready for the next one. I have looked at Asian students as borders since your reply - spoken to someone local who does this and was surprised to learn 2 students $376.00 per week paid to you. Will try for this when i move into IP - this will pay for the groceries and the small mortgage whilst we are in it and upgrading to enable the max. rental return, yes will not sell this one and will rent it out after "we all" move out. The Ip/PPR will then be giving a small income to us also - will then be renting a house to live in as you suggested - I have no problem with that, (except a big fat dog, which always makes it a bit harder)Will then jump in boots first and get stuck into some renos. With hubby being able to sell the renos for us it will help a little toward the profit margin. Then moving back into buy,reno hold scenario.
Anyway - I read and re;read your suggestions about 4 times a day and change my plans once again - great food for thought and thank you for your time and consideration. Will never give up and dream of the day we don't need the banks anymore, what a lovely thought!.
Kind regards
Denise
 
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Reply: 1.1.1.1
From: Les .



Onya, Denise, go get 'em!!!

Had a quick read of the latest API mag, and (believe it or not), the guernsey for growth went to Northgate!!!!! I must admit that name wouldn't have leapt to my lips if I was asked to identify the A1 growth suburb in Brisbane.

But there were around 30 other suburbs that exceeded 20% last year (figures quoted were March 01 to Mar 02). Almost doesn't sound like Brissie!!!! But don't stop, please!!!! (my IP's are in Brisbane, even though I work in Sydney).

Boy, it's been a long time coming, but has pulled out all stops now.

Anyway, Denise, it really sounds to me like you're on top of the situation. Great stuff. And my older son would agree with you regarding Asian students - he has been very impressed with the ones that have shared with him - and they pay well, and on time. When each one moves on, he looks for another.

Good luck to you and hubby,

Regards,


Les


- "Eschew Obfuscation" - ;^)
 
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Reply: 1.1.1.1.1
From: Paul Zagoridis


Can I suggest, Denise, that you try one more time to discuss it with your lender.

1) Talk to a manager. Get a manager's name before you explain the nature of your call. Keep going up the food chain.

2) Your PPOR loan should be subject to the Consumer Credit Code. If you have a redundancy I am aware that losing your job lets you apply to reduce the payments for a time. Look into it. The link is at

http://www.creditcode.gov.au/

3) Give them this URL (it's the link to your original post and at the time of writing has been read 286 times in 48 hours)

http://bne003w.server-web.com/~wb013/read?90495,30

Good Luck. Never take their first answer. It sounds unreasonable.

PaulZag
Dreamspinner
WealthEsteem :: Psychology of the Deal
http://www.wealthesteem.org/
 
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