Bank Guarantees on loans
When you take out a mortgage to buy your home, the mortgage is “secured” against the house. Most people get that, and understand it – it’s the bit that says “You can lose your home if you do not keep up the repayments on your loan” sort of thing.
But on top of that – you also get what is called a Personal Guarantee. Which says that even if we take your home, and you find some nifty way to try and get round paying us what you owe us, you personally guarantee that you will pay us what we want – even if its 20 times what your house was worth. Or something to that effect. Strangely enough its a nightmare of small-print and legal waffle.
And it’s the bit we seem to have no end of problems with in our dealings with ASB. I dread trying to organise mortgages with them now, because I can almost “guarantee” that there is gonna be a problem with the Guarantees.
We have yet another problem with them right because Ive actually paid off one of my mortgages.
Which is obviously a bit of a big thing for me. (Blog will be here as soon as I have the statement to copy and prove it!) It seems the ASB loan department have finally looked through the file, and worked out that one of the trustees in our Family Trust changed about 3 years ago. They were told, but it looks like everyone ignored it. Now they want us to sign another guarantee to replace that one.
For a loan that we have paid off.
Bloodsuckers!
So, as I am already a bit disgruntled with the loans people for screwing us around a few weeks ago, Ive said I wouldn’t do it unless they covered the legal costs – as Lawyers are needed (they are the trustees that changed). ASB have agreed to pay $250.00, so I’m instructing the solicitors that if it takes more than that, they need to stop working on it and tell me. I’m not paying for another bank stuff-up. They wont reduce my bank fees, so I’m not in the mood to indulge them right now.
I’ve also said that I need it in writing that the old guarantee is canceled, and that they are only wanting us to guarantee the amount of the outstanding loan – a rather large $210,000.00 less than the original guarantee.
Banks will try and sneak in a silly amount, but you can tell them to make the guarantee for the size of the loan only – it will have a clause in there that they can come after you for any associated costs and interest anyway.
I wait with baited breath to see what they will do.
One of the things to note about this situation, is that you may be advised to set up a family trust when you come to New Zealand. Usually on the premise that it protects your assets such as your home. But then the bank makes you sign these guarantees, and they bypass the whole family trust anyway. SO don’t be fooled. We are happy to have a family trust, because we have a business and investments, and it will to some extent protect the home my parents and brother live in if we stuff up. But every business loan we have has one attached, so if you go belly-up, the banks can come after us – there no hiding.
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Related posts:
- Beating the banks with the Mortgage.
- Now even our MP’s want to know why the banks are ripping us off.
- Avalon’s Money Thread: Can I get a decent affordable mortgage?
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