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I have recently left Bankwest because I found them very hard to deal with.
They had a first Mortgage on my PPR plus I had a 50k interest only line of credit with them.
They charged me $300 a year for the LOC, and $40 every time I drew back against the principal loan even though it was way in advance of the standard payments.
There were other fees and charges associated with other Bankwest accounts I held too.
Although the interest rate was 6.65% the fees, charges, account costs bump it up so it is not 6.65% at all.
When I approached them to transfer me to a lower cost solution they basically told me they werent interested unless I had my property revalued, at my cost, re-established all my personal income details, and re wrote a new loan at full application fee.
So I went to my broker, got a better deal else where, ended up borrowing more at the same repayment with no docs and Bankwest lost nearly $800,000 in security on my property over which they only had $250,000 lent.
I know banks dont care about people, but I did find the people I dealt with at Bankwest to be quite illinformed and financially naive.
I do have 50k parked in Bankwest on-line saver account which is at call no fees or charges and about 6.0% from memory which at the time was not too bad compared to what was around.
I would advise any one who thinks they have a good deal with Bankwest to keep looking.
My 2c
Thank you for your input.
The property in question is in really bad shape, not structurally but cosmetically.
The previous owner managed the property himself not so successfully it would seem.
Although there is no guarantee that my offer of 60,000 would be accepted, taking repairs into consideration its what I recon I’d need to buy the property for in order to come out on top.
The local agent said he would not think of managing the property in its current state however with the items noted above could get round the $140 a week mark for it.
4% doesn’t sound like much of a return for something that ties your investment up for 9 years.
Based on the investment and return 16.5% sounds like a high management fee to me for something I assume would have a good class of tenant residing in it.
I feel the Govt. is the winner on that one.
Only my opinion.
I have been in business for myself now for over 15 years and it is my experience that lenders do not like lending money with out bricks and morter security. There are probably exceptions but the interest rate is generally high.
You did not say wether you have your own home because if you do you would be better off to borrow against the equity in your home and use the borrowings to buy the business, thats assuming all the numbers stack up and having bought it you can make a profit and support the borrowings as well.
In my experience a line of credit would probably end up costing you more than other forms of borrowing.
If you really want to sell your home and then I guess you could rent and end up with 200,000 less selling costs to invest with.
If you want to keep the home it may be better to re-finance with another lender and gain access to some of your equity.
A competent broker should be able to show how to do an asset lend with a re-draw facility or take it and put it in a high interest 5.5%-6% at draw account to help offset the payments till you need it.
Of course with any lender you would need to show or prove your ability to service the borrowings, and have a clear credit history.
Demayn
I have just done a refinance with Mortgage Mart above via my broker.
Loan is NO Doc, yes NO doc.
Borrow up to 65% LVR
7.09% for first 2 years there after reducing to 6.69%. Interest only for first 10 years thereafter reverting to P&I.
up to 5 splits, no fees or charges, redraw facility.
You will need to supply 12 mths current lenders bank statements. 100 points ID, rates notice. Unblemished credit record.
Ring them and ask for the broker in your area.
Email me if you want and I will give you the name of mine I am in Sydney.You seem to have thought the problem through well.
Tough decisions are sometimes hard to make but you will feel bigger having made them. I tend to agree with those that support your option 1 as an exit strategy.
I believe you are correct that if you sell at a loss you can retain the capital loss and claim it against future capital gains so there is a future benefit. But Ask your accountant.
Strugglin for cash to live on is no fun, with a young baby to look after I would do what was necessary to avoid it.
You have been sucessful, and will be again.
I can assure you not every decision you make will be a winner. Bad decisions unfortunatley are part of the learning experience.
Good luck
Good Morning,
I joined yesterday and have been enjoying viewing many of the posts. There is some fine exchange of knowledge here it is a credit to the contributors. I will be spending some time here in the future.
I would like to take up the issue that ashrik raised of financiers calling up loans and the follow up question raised by stormbiz that said…
“I’m pretty sure this is not the case with property now. Certainly with margin loans with the share market, but there was a detailed thread a few months ago where many people ‘I assume in the know’ stated banks can only start to call in a loan in the case of default, not simply by a fall in equity ratio (even if a negative occurs!).”
I can tell you first hand that the bank can can call their loan back for ANY reason whatsoever.
Back in the late 80’s I borrowed $750,000 on 3 year bank bills IO from a major Australian bank which was 100% of the purchase price to buy the factory my printing business was situated in. The price was high but I thought it was a good buy because it would have cost me a lot more to move all my printing machinery to a lower priced factory anyway and I was intent on not renting anymore.
The market crashed within 2 years. The factory went from 750,000 to 520,000. Despite the fact that I had never missed a single payment PLUS assurances from the bank over the previous 6 months that there would be no problem re-newing the finance when it came due… when the bank bills came up for re-newal they tapped me on the shoulder for the shortfall.
Due to the recession my printing company was strugling but despite that it still had possitive cash flow and the bank knew it. So I asked (no I begged!) them to let it go and just re new on the basis that the value would rise once again in the future.
The bank in question was in major financial difficulty and was selling their own property holdings to secure cash and they said no and gave me 30 days to find the money which I was unable to do.
When I made an appointment to see several top executives of the bank at their head office and plead my case I was not treated like a good customer at all, and sensed immediatly that I was going to be opposition.
They simply told me to get the money or else and suggested I should go home and read my mortgage document which I did and it said the bank could call their loan for any reason even if all the payments were up to date.
When I couldnt get the shortfall the bank asked for the whole lot back in 30 days.
The rest is a much longer story than this and with help from friends in the printing and legal business I actually came out of it in not too bad condition but I want to make the point that you do not have to be in default for banks to act against you despite how keen and freindly they are when selling the funds to you.
Sorry for the long post as a first timer but I wanted to make that point based on first hand expeiience.
Cheers
Craig
