Im 41 yrs old and retiring Will the banks call in their loans.

[Denis newman]

I am an investor who has a business and a rental portfolio, im considering selling the business and paying down the loans on the properties which will replace my current net income... my loan to value ratio will be 30% after the sales and pay down process.
Im well aware of banks and their ability to call in loans... who out there has experience in a similar equation... the question is will the banks call in their loans now that im living off the rents instead of having the business there to reduce risk for them.
The properties are all managed by the team at Bray property management who have been largely responsible for getting me to this position in life so early so yes the properties are fully managed.

[Leftette]

If you're retiring at 41 and selling the business, I'd like to buy this business from you!

[PTILoveYou]

The simple answer is no, as long as you don't miss any interest payments.

If you ask the bank for a top up on your mortgage sometime in the future, then they will look into your cashflow more carefully.

The rest of the time, the bank won't want to know you unless during interest rate refix times.

[Wayne]

What Gary said would be my expectation also.
Probably you should tell the bank about the considerable change in circumstances

[PTILoveYou]

Probably you should tell the bank about the considerable change in circumstances

Now that will probably ruffle the bank's feathers and I won't recommend that...

[AMR]

I agree Gary, probably talk to a mortgage broker with a number of grey hairs and broad experience with a number of different banks to see how they'll act. The banks were playing nicely last recession but it doesn't mean they'll keep playing nice.

[Wayne]

Now that will probably ruffle the bank's feathers and I won't recommend that...

Have you read the contract you signed?
I suspect it will say something about informing them of changes in circumstances.
I say suspect - I don't actually know as I haven't read the fine print of my own contracts.
Just saying.

[genius]

Yes. You are "technically" supposed to inform your bank due to a change in financial circumstances. I doubt anyone would/does.
As long as you don't miss any payments, they couldn't care less frankly as Gary says.

[PTILoveYou]

I suspect it will say something about informing them of changes in circumstances.
I say suspect - I don't actually know as I haven't read the fine print of my own contracts.
Just saying.

From my experience, after the property is settled, and you keep up with your mortgage payments, the bank won't contact you at all. The only instance is when they send you a letter reminding you your fixed term is about to end, and offer you some crappy interest rates.

No body read the fine prints

[Wayne]

From my experience, after the property is settled, and you keep up with your mortgage payments, the bank won't contact you at all. The only instance is when they send you a letter reminding you your fixed term is about to end, and offer you some crappy interest rates.

No body read the fine prints

Agree with all of that.

[Eljay1]

Definitely wouldn't mention it. You've said you expect rentals to replace your income so you're not technically expecting any major change as such. However, who knows what it could trigger if you told them? Presumably if you find yourself getting into financial strife you could pick up some paid work or sell a property. Well done on your achievement

[Denis newman]

Hellllooo leftette... love the photo... sounds like we should discuss a few deals over a few drinks sometime...pphheew anyway thanks to all that responded today these answers are along the same path as my understanding however I wanted to dig deeper and see if anyone has done something similar e.g retire on their portfolio or have you had the call from the bank yourselves. I remember talking on the phone to a guy who was selling his house in 2009 (recession time) his story was terrifying as the banks were selling him up... it was a terrifying story however I understood that case as he was a trader renovator type who was leveraged to high, the banks at the time were reigning these guys in left right and centre. Anyway very important subject to me and others I would imagine so welcome any comments.

[Damap]

It depends on your set up Denis. I went through all sorts of trauma including bankruptcy and the banks (generally) didn't care as long as the mortgages got paid. Except for the usual pricks (ANZ).

[charlotte30]

I had this discussion with a mortgage broker yesterday. Her response was it all depends on your level of debt. My personal situation is that the rents pay mortgages with 25% debt across the portfolio. I have said to my bank that I am looking for more property and will want to borrow sometime this year. Does not appear to be an issue. That said I still do not trust the banks and have some properties that are not mortgaged.

Cheers
Charlotte30

[Davo36]

Well my take on it is that you'll be ok to not tell them as long as things are tickety-boo.

But if we have a bit of a downturn, you maybe lose a couple of tenants at once and struggle a bit to pay the loans - then the bank finds out you don't have a job but haven't told them - then you could be in the pooper. Because you have violated the terms of the agreement - which will definitely say you are to notify them of any change in financial circumstances.