Withdrawing LOC's

[pieman]

In view of the financial turbulence, have any of you considered withdrawing your unused LOC's and putting it in a TD in another bank. I see Lehman lenders would immediately withdraw all lines of credit, which wouldnt thrill me if ANZ decided to start withdrawing my 600k LOC unused funds.
Im aware of the cost, ie no deductability and paying int. on the new TD but the reasurance of having the cash maybe worth it.
cheers
pieman

 

[Rolf Latham]

Hiya

If the loan gets called it gets called.

Dunna matter if its an LOC, a IO woth offset or, you have your loaned money in a TD in Vanuatu.

ta
rolf

 

[pieman]

Yes and no, if assets that they are lent against start reversing quicly there is no way known a bank will come in and force a sale to recover their loans. That would further reduce the value of their assets, ie. resi housing. If the entire LOC was in a TD at another bank, then surely all the bank could ask is that you pay the interest each month as stated in your contract? Not sure of the fine print...Rolf?
pieman

 

[Rolf Latham]

many LOCs and some normal loans are "repayable on demand"

More so, the "default provisions" on most mortgage backed loans are pretty ugly............................ if you read them

ta
rolf

 

[hobo-jo]

If you've paid LMI for a LOC and it's recalled would you be in a good position to have that money refunded considering the LMI is money paid to have those funds available?

 

[Rolf Latham]

Hiya HJ

Id say you would have moral position..................contractually though , best of luck.

ta
rolf

 

[Nathan]

I have heard of many people doing this, even using an online savings account with a different bank.

The interest deficiet is worth it to ensure you have availible funds...

(wish i had more $$ in the kitty @ present)