residential investment loans at call

[KJB]

Have seen a few posts mentioning loans that the bank can 'call in', mainly LOC's

Has anybody had this happen or has any examples? I know there would be different reasons from bank to bank. Just want to see if there are any trends/similarities in the reason. e.g. is it more to do with changes in an individuals situation or the economy or a bit of everything all at once?

I recently read a post which implied LOC's intended for business use would be more at risk of being called, so how 'safe' are LOC 's used for IP related expenses?

 

[Terry_w]

Have seen a few posts mentioning loans that the bank can 'call in', mainly LOC's

Has anybody had this happen or has any examples? I know there would be different reasons from bank to bank. Just want to see if there are any trends/similarities in the reason. e.g. is it more to do with changes in an individuals situation or the economy or a bit of everything all at once?

I recently read a post which implied LOC's intended for business use would be more at risk of being called, so how 'safe' are LOC 's used for IP related expenses?

I've been broking for about 14 years and never seen a loan called in ever. I have heard of others with LOCs where the facility has been closed because it wasn't used, but none that have required repayment.

Each lenders loan contracts will be different, and same lenders different as they change conditions over the years so all you can do is to read your particular agreement - never know of anyone to actually read one, other than myself (but not every time).

 

[jerrybee]

Always reassuring to hear. It would be a game changer if we all had to consider this possibility.

 

[Jamie M]

I've never personally seen it occur either.

Cheers

Jamie

 

[Peter_Tersteeg]

During the GFC I did see some policies put in place to cancel the limits of Line of Credit products. It was done as a matter of policy, rather than targeting an individual borrower (if limit hasn't been used for x period of time, it got cancelled). I don't believe anyone I know was affected.

 

[Paul@PFI]

Generally if the loan is being paid then the mortgagee cant cancel a loan. One nasty seen during GFC and even in recent times etc is a lender withdrawing from market.

One of problems with using fringe players in lending v's the majors can also result in them leaving the market. They can ask you to refinance. That can always put a strain since timing may be poor (murphys law again). Challenger did this a few years back to a client but they refinanced at a far far better rate. It did cause a panic since they didn't give much time to act and it was a tough market for their business. The strong real estate security seemed to sway it towards approval. During GFC this was harder or even impossible.

 

[Kaz111]

I've never personally seen it occur either.

Cheers

Jamie

Thats reassuring to know. Ive got a couple and they are very handy.

 

[Marty McDonald]

If you read the loan offers fully they all say they can change anything about your loan without your consent. So really you are going off trust and the fact that there is competition for your business. Problem is what happens in a really bad downturn.