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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The financial crisis explained
Filed under: Banks, For the numpties amongst us, Hubby's Views
As explained by a ‘banker’ -- thanks to The Now Show (18/12 again);
“In laymans terms it works like this; if you get yourself into financial difficulty, say you fail to manage your own finances properly and are incompetent enough to get yourself into enormous debt, with absolutely no hope of paying it back -- the bank takes your money.
If on the other hand your bank fails to manage it’s finances properly, is incompetent enough to get itself into enormous debt with absolutely no hope of paying it back -- the bank takes your money.
It’s really very simple”
Which also reminds me of The Two John’s, explaining the financial crisis {watch with some irony for the Google ad’s for GE Money, Kiwibank etc.. -- hmm, someone didn’t think about what to exclude from the key words};
Avalon’s Money Thread: Working out our net worth.
Filed under: Avalon's Money Thread, Banks, Economics, General Budgeting, Investing in general, Mortgages in New Zealand, Property Investing
We’ve done the budget, we’ve made some decisions, our personal Fixed Rate mortgage comes up for renewal in January, and we have decided to rejig the way we pay our mortgages.
All that was left to do was to track what our Net Worth was – which given the economy was a highly daunting task to be honest.
Your Net Worth is basically the value of what you own (assets) minus the value of you owe (debts). Unlike a Budget, which tells you what you are going to do over a month or year – your Net Worth tells you how much you have right now. Today.
It’s not difficult (especially if you have your accounts in order and your paperwork filed)– just a bit depressing at the moment. Because I like spreadsheets, and I’m lazy, I just copy the same spreadsheet from last year and fill in the numbers – its quite straightforward. In fact the only difficult bit to be honest is grabbing the bits of paper that contain the info you need.
On one side I have a list of all the assets: property, banks accounts, savings accounts, shares, pensions, car, and household goods (Insurance value is the best way to determine that).
On the other side are the mortgages, credit cards and any loans.
Take one from the other, and what is left is how much you are worth today.
In our case – about $250,000 less that we were 2 years ago.
I kid you not.
So why am I not crying into my coffee right now?
Well, Net Worth is a really good indicator of how you are doing financially. But it has to be taken in context. Most of that “wealth” is paper money. It doesn’t really exist. I don’t have $250,000 less dollar coins than I had – it’s just that my properties have gone down in value. In time – the value will go up again, and so will my “wealth”.
It becomes an issue if you want to borrow money and maximise how much money the banks will lend you – as they want to know the value of your assets. When I spoke to the valuer to get ours revalued – he said that he’s never been busier with banks insisting on clients getting up to date values on all their properties. While this can be annoying – I have to say I think I’m actually with the banks on this one.
I spoke to ANZ the other day about the possibility of refinancing a rental (the funds to be used to reduce personal mortgage – so no extra lending overall). They won’t lend more than 70% of the value of a rental, and my mortgage was for 75% already. The thing is, while doing this is defiantly for the banks good – it also prevents us as buyers from over extending. I think we personally got lucky that the recession hit so fast just after we bought our 3 rentals and couldn’t buy any more. It prevented us going mad, getting caught up in a storm and going belly-up which has happened to an awful lot of people.
We have “protected” as much as we can of our net worth by paying down as much debt as we can as fast as we can. So while our assets are worth much less, so are our debts. There is actually a lot you can learn from a recession, and if you can get through this and come out the other side – then just think what you will be like when the economic climate improves.
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Argghhh – Banks (again).
I dream of one day waking up and finding out that the people in charge of my banks in New Zealand actually look at their customers accounts and business before making blanket decisions.
It would be nice – just once – to be treated by a financial institution as if I was something more than the dirt beneath their feet.
Today’s frustrations comes from finding out that I have lost my Interest rate discount on my personal Revolving Credit mortgage. Of course – the bank didn’t bother to tell me this – that would be proactive and customer focused. Instead I found it out while doing my accounts and balancing my statements.
So I contacted my Personal Relationship Manager – who I have to say is exceedingly good, and I have absolutely no complaints about – to ask for it to be restored.
Except – as always – there’s some faceless ninny in a back office who says “no”. Faceless ninny of course doesn’t have to front up to pissed off customers – but hides in the back office and lets someone else take the heat for their stupidity.
So here’s the thing that makes said person in back office a complete moron.
I hardly ever pay interest on that account anyway. In fact last year –out of 12 months – I paid interest on only 3 months – most of the time the bank had to pay me because I was in credit. Things have been tight this year – so I have had to pay a little bit.
$429.60.
Since April.
My rate is 5.75, but with the discount would be 5.5%.
What this means is that over the same period – I would have paid $410.92. (Ha – see school maths and simultaneous equations really does come in handy every so often).
Now it would be worth the bank perhaps not giving a discount on a mortgage where someone pays a lot of interest – our original interest charges were nearly $1000 a month. But in this case – for the sake of $18.68 they have hacked me off, and I’ve written a blog about them.
And I’m about to pull my life and income protection business off them as a reward. That’s $220 a month in premiums down the toilet.
Never think you cant do something to get the banks back if they treat you like garbage. There are ways – and we can vote with our feet. It might be difficult with banks as they all seem hell-bent on trying the be as crap as each other – but hey – we can still try.
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Argghhh – why all these “extra” charges???
My perennial favourite of course being the patently ridiculous “Automatic Payment Loading Fee” the bank charges me to do their job for them and set up a standing order – but just this week I have seen three almost as ridiculous examples of spurious rip offs.
First goes to Ticketec. Now they always add silly charges – mostly for posting your tickets to you. Extra if you live in the countryside of course. And they will charge you if you don’t want them to send it to you – you want to pick them up instead. But now they have gone one further and will charge you $5 if you want to print your ticket at home, on your own printer, using your own ink, and your own paper.
Second goes to Reading Cinema who again charges you $2 for the “privilege” of ordering your ticket over the internet and saving the staff 2 minutes work.
But taking the biscuit completely for a wacky and completely pointless charge goes to Aotea Pathology. I needed to go have a blood test on Saturday morning – which meant I had to get up at 7am (and on a Saturday dammit) and go into Welly because the local clinics don’t do tests on Saturday (sensible people).
So I go in, give my name, pay the bill and am asked to sit down and wait. It wasn’t until I came out of the labs that I happened to look at the bill. Alongside the two charges for the tests themselves is a third charge.
Encounter Fee – $12.57
WHAT?????
This it seems is the charge for the lady at reception to take my name and charge me the fee and ask me to sit down.
The mind boggles.
Bloody rip off merchants.
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Watch those Direct Debits in New Zealand.
I need to cancel a Direct Debit. No problem you would think? Hmmm, not so fast – this is the New Zealand Banking system, and so of course it just ain’t that simple.
In Avalon’s Guide, one of things I stress is:
And something which is vitally important: once you have closed down all your utilities in the UK, like gas, electricity, internet, and you have told them not to take any more money from you via Direct Debits – also tell your bank! You should always cancel your Direct Debits with the bank, and then if any company “forgets” that they shouldn’t be charging you anymore, they can’t get your money.
So I figured (I think rather sensibly) that I would do the same thing here. Cancel the Direct Debit at the bank just in case the company I’m dealing with (which so far has shown itself to be run by a bunch of bone idle morons) “forget” and try and take another premium.
But the bank wont do it.
Apparently, the only way to cancel the DD at the bank is to cancel my Credit Card and get a new one.
What???? 
Are these people for real?
This is despite a clause on the DD form that says:
2. The Customer may:
(a) At any time, terminate this Authority as to future payments
by giving written notice of termination to the Bank and to
the Initiator.
(b) Stop payment of any Direct Debit to be initiated under this
Authority by the Initiator by giving written notice to the
Bank prior to the Direct Debit being paid by the Bank.
Apparently, I cant.
So I contacted Direct Debit New Zealand, who were also as effective as a wet paper bag. Although they have said:
At directdebit.co.nz we are looking to increase the visibility of these
processes to ensure the “customer” controls the direct debit process more.
Which is nice.
So be warned. Here in New Zealand the Direct Debit system, which is supposed to offer us all sorts of protection, doesn’t.
The banks are ignoring their duty under the agreements we signed.
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KiwiBank Analysts – need to switch thier brains on.
Kiwibank asked their “analyst” to look again at our application for a Credit Card. Which if you think about it is a bit silly as he is hardly going to be admitting to be an idiot.
But the same analyst has said no – because yes – he is still an idiot – and can’t grasp that there’s actually a lot more at stake than a bloody credit card.
The thing which makes me want to scream with frustration is that its actually people like this who caused the collapse of the banking system and the recession in the first place – because they insist that money behaves in a vacuum.
You see money is just a number.
- X amount of debt is too much
- Y amount of debt isn’t enough.
Analysts and Economists tend to forget that it’s Human Beings who spend money, or don’t spend it, and do it in the main for emotional reasons. Analysts don’t tend to look at any other factor. This guy is only interested in the amount of debt. He doesn’t give a toss about excess income, savings, assets, or amount of debt paid off. He looks at one number in isolation and decides whether you are worthy or not.
They also tend to forget that when you piss us off – we can have very long memories, and bad customer service now will be remembered for a very long time.
Its also hugely frustrating that while we obviously can afford a credit card, never having missed a payment in our lives – we can’t get a new one, and yet people who have no hope of being able to pay off the balances will get offered them by the bucket load. And if anyone thinks that’s not the real reason we have been turned down – you could be dreaming.
The fact is people like us don’t actually make money for the banks on our credit cards, because we don’t pay interest. Credit cards only work for the banks if you don’t pay them off. The damage that has been done across the western world by banks insisting on giving credit cards (and mortgages) to people who cannot pay off the balance is staggering.
It should be said that I have been dealing with a very patient and understanding man at Kiwibank (the Analyst wont “front up” to a mere “customer”). It’s a pity that the humans aren’t in charge.
So, thats BNZ and Kiwibank who will never see a cent of our money.
The list of banks who haven’t right royally hacked us off yet is getting smaller. 
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Banks – why are they all run by idiots?
Following on from the post about trying to get a Kiwibank GoFly card – we got turned down.
Why?
Because we have a lot of lending.
No shit Sherlock – that’s because we own a lot of property – which even with a recession is worth a lot more than the lending on it. Apparently the 30,000 in credit card limits is also a concern – completely ignoring that we have always paid all the balances off in full.
This is what happens when you put a bloody “analyst” in charge – common sense has no place in their limited thinking.
So because this dumb “analyst” can’t think for himself – Kiwibank joins the list of banks that do not “match our criteria”, and will be told where to stick their accounts when things change and they are once again desperate for increased market share.
So ASB still comes out way on top – and even though I may not like some of the things they do – they are still by far the best bank in New Zealand.
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Applying for a new credit card.
Well, it was easy enough to apply – just fill in an online form at Kiwibank.
If only.
So first off – why on earth would I want a new credit card? I’m not a fan of them, and yet I already have three. The problem is the major rip-off that is most reward schemes in New Zealand. The misleading “Flybuys” that so many people go to great lengths to accumulate will only let you actually transfer points into Air New Zealand Airdollars if you own a BNZ global plus credit card. As we had to give ours up – due to BNZ allowing other people to use our credit card details with impunity, and then getting shitty with us when we dared to object to their incompetence –we are no longer able to use “Fly”buys to – well – fly anywhere. (And the other things you can buy with them are a waste of time anyway.)
However we did quite well with our ASB cards. ASB run a rewards program, which costs $10 ever six months, for each person on each card (so with 3 joint cards that’s $60 every 6 months). Because all our spending goes on Credit cards – we were making enough points for that to be worth it.
Except ASB, in the way that only banks can be stupid enough to do – keep altering the scheme to make it less attractive. First – they stopped allowing you to use your points to pay your bank fees – which is something I thought was brilliant. (I really don’t want a bleedin’ toaster – but a cut in bank fees is worth real money). Then, just recently – they have decided that we can no longer change our True Rewards in Airpoints Dollars at Air New Zealand. So we have arranged with our manager that next time our TR fees becomes payable – we are removing it for two of the cards as we don’t do enough business on them to make it worth the cost.
Step in Kiwibank.
They are now offering a GoFly Credit card – where for every $150 spent you get $1 in Airpoints dollars. With a platinum card – you get $1 for every $90 spent.
Magic.
And the best bit – although the card fees are slightly higher – you don’t pay extra to join the reward scheme (they can set up an Airdollars account for free – saving the $50 that Air New Zealand want to scam you for). So we are going to pay a whole dollar more ever 6 months on our fees. I think I can live with that.
Really – the only downside was the application process. I filled in the online form, but it won’t let you apply for joint accounts online. So I applied in Hubby’s name (as he is the one with the income), and then phoned to add some details to let them know this would be a replacement card rather than an application for extra credit. Only Kiwibank at this point need Hubby’s Permission to speak to me.
WHAT???
I’ve just applied for a credit card for him – and now he needs to give permission? Because it’s HIS account – not a joint account. Well – can we make it a joint account I asked – since that’s what we really want in the first place? No – not without his permission.
Thankfully Hubby was here – so I threw the phone at him and asked acidly if he would give Kiwibank “permission” to speak to such a lowlife as myself. When he stopped laughing – we managed to get the account application converted to a joint one – where now I am considered eligible to be spoken to.
Sheesh – banks. Hate them all.
We should know by the end of the week if Kiwibank consider us worthy to have an account with them. If they have any brains they will – because we are looking at alternative banks for our mortgages all the time – and this is a way of showing us that they are a bank worth doing business with. It never ceases to amaze me how much the New Zealand banks see their customers and potential customers as if they are something they have just stepped in – rather than the source of their much needed income.
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Banks are the enemy :)
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