We have around $2million debt with kiwibank at present with a number of properties and are looking to make a $600k purchase next week. We have $300k equity which is not tied up with kiwibank at all. Is it best to get a mortgage with kiwibank or go to a different bank? If so why? Advice appreciated. Thanks
Announcement
Collapse
No announcement yet.
Spreading bank risk when buying more property
Collapse
X
-
1. Old saying: Banks are good weather friends. They give you an umbrella when the sun is shining and take it away when it’s raining.
2. When you have to change the lender... unless you have several relationships you’ll be a stranger to them. Would you be more likely to help someone you know a little then a stranger?
3. The first thing a bank will do when you need them is remove your relationship contact.
4. Having options and choices is good
-
Originally posted by fpl View Post1. Old saying: Banks are good weather friends. They give you an umbrella when the sun is shining and take it away when it’s raining.
2. When you have to change the lender... unless you have several relationships you’ll be a stranger to them. Would you be more likely to help someone you know a little then a stranger?
3. The first thing a bank will do when you need them is remove your relationship contact.
4. Having options and choices is good
Comment
-
Very good wording there FPL, I agree too.
Having these options with multiple banks is good but as always there's a reverse side too - the more wealth with a bank is the more they respect you but like BNZ it seems todays younger bankers forgot how to care about the customers altogether.
My experience on BNZ is they give a bit to average and lower people not even charging for cheques etc that bounce, yet they now charge us more important customers for everything they can. Any overseas transaction in cash or by credit card is hammered with charges. If you have your mortgage due to renew you possibly will be charged just to renew it but certainly will when you pay even just $5 off the mortgage - this accounts for almost 0.5% increase on the cost of your actual mortgage rate. I bet their next step is to charge us for putting our money in Term Deposits and this is what non-kiwi banks behave like now. Think where will the profits from the bank go to and this will show how they will treat you overall regardless of any promises they make - banks are probably the least honourable of all institutions so any deals of reasonable wealth it pays to have a lawyer confirm or else the fine print will hit you in the end once that banker has moved on .
Comment
-
I totally agree with spreading your borrowing (spreading your risk)
Back in 2006 I thought all was great having most my lending with ASB (approx 1.5mill) and having a really good relationship with a commerical manager at ASB, until the day I was waiting on my loan docs to sign return to drawdown - along with emails from my commerical bankers that the approved loan docs were on there way to me to sign.. I was told on several occasions that they would arrive -
Finally after weeks, I was told that - 'equity can not be used to repay debt??' - I was planning to repay a line of credit facility I had set and used some funds for the deposit of the next purchase..
Funny as this was a strategy I had used many times with ASB - i.e. equity used to fund a deposit.. I was told that the decision was made from higher up..
Needless to say - from that lesson, I now have borrowings with ASB, ANZ, BNZ, and WPT..
It only takes a lesson like this to show you that the banks have all the power, and really they can and will do what is in their best interests!
I would rather spread my risk across many lenders - now when I want the best deal -I have more options available, better choices, have created competition within the lenders, established relationships across the board, and greater confidence and certainty in taking the action you want to take.
Good luck!
Comment
-
Definitely spread your borrowing around. It is not until you face a financial reversal that the importance of this becomes clear. You can still maintain a great relationship with Kiwibank as well. A classic example of why you should spread is this. Currently lots of investors are wanting to sell a property or two to get some equity out and give themselves a cash buffer. However, as the mortgages are with one bank, that bank will just gobble up the cash and reduce the other mortgages. Not a great result for the property owner!
Comment
-
Personally, I think spreading your debt around is a bad idea.
My experience has been that the banks don’t check your total debt – stupid really – because how can they know if you can service the mortgage they gave you?
Actually, banks require you to sign a disclosure declaring your total debt. It is actually a crime to lie about your other debts on a mortgage document.
In fact, I believe that the only reason to “spread” your debt from bank to bank is that (even in this era, or should I say error, of lax lending rules) is that a single bank would not extend the extra credit you asked for. So, that would mean that some of you deliberately set out to defraud some other bank
Comment
-
Originally posted by Tony FJ View PostDefinitely spread your borrowing around. It is not until you face a financial reversal that the importance of this becomes clear. You can still maintain a great relationship with Kiwibank as well. A classic example of why you should spread is this. Currently lots of investors are wanting to sell a property or two to get some equity out and give themselves a cash buffer. However, as the mortgages are with one bank, that bank will just gobble up the cash and reduce the other mortgages. Not a great result for the property owner!
I would have thought that being with different banks would be a hassel if for example you've got some spare equity with one bank and some more with another but only combind they'd be enough to secure a new property?
Comment
-
Originally posted by fatfishandchipman View PostPersonally, I think spreading your debt around is a bad idea.
My experience has been that the banks don’t check your total debt – stupid really – because how can they know if you can service the mortgage they gave you?
Actually, banks require you to sign a disclosure declaring your total debt. It is actually a crime to lie about your other debts on a mortgage document.
In fact, I believe that the only reason to “spread” your debt from bank to bank is that (even in this era, or should I say error, of lax lending rules) is that a single bank would not extend the extra credit you asked for. So, that would mean that some of you deliberately set out to defraud some other bank
What bank does not check your total debt ? None that I've ever come across .
Comment
-
The banks have been relying on your honesty to provide it. They don’t check or at least they didn’t. When real-estate was bubbling along it was no big deal – if you couldn’t service their loan they would just take the house and sell it – at a nice profit I might add. So, if things have not changed yet, they will.
The term “spread your risk” is a misnomer. If you can service your debt, have money in the bank, and high equity, then you have very little at risk. And besides you are the borrower – the bank is the one that has put their money at risk!
No. The only good reason to “spread” your debt about is that your original bank thinks that you are too high risk and won’t give you the money to begin with.Last edited by fatfishandchipman; 26-04-2010, 05:50 PM.
Comment
-
Comment