From: Cathy Baxter
Hi
Currently applying for 2 loans – 1 for our company / trust entity and the other personally as joint tenants for investment property.
Solicitor has provided all sorts of warnings regarding the terms and conditions of the loans and husband has got cold feet over both loans. Things of concern are eg (loan to company):
“Effect of Default – for non payment of moneys or non-observance of the terms of loan eg non payment of rates, insurance and creditors, keeping property in good repair, compliance with statutory requirements could result in whole of loan becoming repayable immediately, the payment of penalty interest and the right to enter into possession of the security and / or effect a sale.”
“Guarantors – directors to be guarantors” – therefore personally liable and effectively able to take possession of personal assets.
Solicitor says most loans have these clauses – but he doesn’t like them – so are we in a no win – have to accept conditions to get the finance?
Reading the “Memorandum of Provisions” for investment loan (personal) has equally onerous provisions such as: need to advise mortagee of works on property, if property is rented, changes to rental, insurance, payment of rates. They have ability to exercise their right or remedy in any way appropriate, enter the property, recover our personal possessions and get this “fill in any blanks in in this mortgage”!!!! There’s lots of white space!!!
So with regard to the company loan do the majority of loans require personal guarantees from directors?
If so, should we be concerned about their ability to take possession of our assets for issues such as keeping property in good repair (a subjective judgement)? Or other events such non payment to creditors? Is this just the inherent in the level of risk that we have to live with or should we be looking for a better outcome?
Has anyone had experience of financiers playing hardball with compliance to the letter with their mortgages?
I would expect that if you were in default of your mortgage that action would be taken, but if for example you didn’t pay the rates one quarter or were late would they even know or be concerned?
Sorry this is a lot of questions.
But you guys have so much experience and wealth of knowledge I know you can help.
Thanks in anticipation
Cathy
Hi
Currently applying for 2 loans – 1 for our company / trust entity and the other personally as joint tenants for investment property.
Solicitor has provided all sorts of warnings regarding the terms and conditions of the loans and husband has got cold feet over both loans. Things of concern are eg (loan to company):
“Effect of Default – for non payment of moneys or non-observance of the terms of loan eg non payment of rates, insurance and creditors, keeping property in good repair, compliance with statutory requirements could result in whole of loan becoming repayable immediately, the payment of penalty interest and the right to enter into possession of the security and / or effect a sale.”
“Guarantors – directors to be guarantors” – therefore personally liable and effectively able to take possession of personal assets.
Solicitor says most loans have these clauses – but he doesn’t like them – so are we in a no win – have to accept conditions to get the finance?
Reading the “Memorandum of Provisions” for investment loan (personal) has equally onerous provisions such as: need to advise mortagee of works on property, if property is rented, changes to rental, insurance, payment of rates. They have ability to exercise their right or remedy in any way appropriate, enter the property, recover our personal possessions and get this “fill in any blanks in in this mortgage”!!!! There’s lots of white space!!!
So with regard to the company loan do the majority of loans require personal guarantees from directors?
If so, should we be concerned about their ability to take possession of our assets for issues such as keeping property in good repair (a subjective judgement)? Or other events such non payment to creditors? Is this just the inherent in the level of risk that we have to live with or should we be looking for a better outcome?
Has anyone had experience of financiers playing hardball with compliance to the letter with their mortgages?
I would expect that if you were in default of your mortgage that action would be taken, but if for example you didn’t pay the rates one quarter or were late would they even know or be concerned?
Sorry this is a lot of questions.
But you guys have so much experience and wealth of knowledge I know you can help.
Thanks in anticipation
Cathy
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