The standard T&C's of a bank loan allow the bank to recall the loan at anytime.
Banks can call in a loan at anytime regardless of repayment history.
What they said!
The main protection we have is that banks don't want the bad publicity associated with foreclosing; they really have rather strong incentives to avoid it. But they sure
can do it if they want to.
When my solicitor screwed up conveyancing (advised searches were clear when they weren't
), and post-settlement a major defect was revealed, rendering my property uninhabitable
, I - naively - went to the lender asking for more finance to rectify the problem. The bank not only declined my request for funds to rectify, but made verbal representations via my broker that my property wasn't worth what they'd valued it at 2 months earlier (when they didn't know about the problem), and thus they were considering calling in my loan. I don't know how serious it was, but I just tried to stay off their radar, and refinanced as soon as I possibly could.
I wouldn't want to be betting that they'll never call in residential loans.
In particular, I wouldn't want to have a high LVR loan in any area with a plethora of new homes (Kellyville in Sydney, Redbank Plains or North Lakes in Brisbane, Taylors Lakes in Melbourne, to name just a few), or single-industry booming regional areas.