Call clause on LOC?

[Barracuda]

Looking at a contract for a Westpac LOC (Rocket) there is a clause that has terms to the effect of the following (sorry, don't have clause at hand):

Westpac can, at any time, reduce the amount of credit available in the LOC and requires that any shortfall (ie, outstanding amount above the new limit) be payed immediately (yes, they say immediately). This includes reducing the LOC to zero, in which case the entire outstanding balance of the LOC needs to be paid back immediately.

Is this a standard clause in LOC contracts - or unique to mine?

Has anybody been successful in modifying or removing this clause?

I would think that an "immediate" repayment cluase would worry most. I would think that a reasonable time should be allowed to liquidate assets to repay outstanding amounts due to the bank's action - say 14 days. I accept that "it's never happened", but I wouldn't want to be caught out if they start to go under and suddenly want to call in this money.

It is a sticking point that will stop me signing tonight unless it's something that is normal for all LOC loans and nothing that I can change. Any advice (Rolf?) really appreciated.

Cheers, Barracuda

 

[Rolf Latham]

BEST of luck :O)

An IO term loan with 100 % Offset is marginally better, but lets face it..............have you read the full Mortgage doc end to end

If you did you wouldnt take the loan.

ta
rolf

 

[Barracuda]

BEST of luck :O)

An IO term loan with 100 % Offset is marginally better...

Thanks for the tip Rolf, I'll talk to the broker about it.

As long as we're all signing our first-born's live's away, that gives me some comfort

Perhaps I need to read a little more carfeully to find the "Rumplestilskin" clause...

Cheers, Barracuda

 

[alexlee]

There's a PR impact here, right? I mean, if the bank calls your mortgage even though you're still making payments.... my next phone call would be to the newspapers, radio stations and TV saying how the banks are attacking battlers.

The banks want you to keep your loan and keep paying interest. It's not in their interests to call in a loan and maybe take a loss on it.
Alex