Forum Replies Created
Hello Terry,
Personal money? Probably not. BUT, I don’t have shareholders to appease[
]So, the question to be asked is, why this product at all – is it that the banks HAVE to offer it? No, I would think not – except I would expect it is being supported by the Fed Gov as a way of easing the Social Security burden – and we all know how much Uncle Gov likes to look after everyone [
]So, if the banks are in the business of making profits from lending, (amongst other businesses), what is the upside vs the downside? Well, at a MEASLY 15-20% LVR they have protected ABSOLUTELY their downside – let’s face it “Fire Sale” at 20% LVR is a lot easier to achieve than 80%LVR.
So why offer it in the first place? Perhaps so that the institutions can claim a balance sheet profit (ie. unrealised) to their shareholders of whatever nominal rate of interest they are expecting to recoup at the end…what is the interest rate, anyway? Is it standard variable or is there a “risk margin” attached?
All round, I would *seriously* wonder about taking out one of these loans, at 20% OR EVEN 80% for the credit risk alone.
What about fire/catastrophic failure risk? If the house burns down after 5-10 years, the insurance pays out, the bank gets paid its interest + principle and what then…the owner has to find new accomodation which they now have to afford with a LOT less in their pocket than they had before.
And, again, what happens in the case of the last surviving title holder becoming legally incompetent and requiring care in an instituation? Does the bank then have licence to have the property sold at “whatever” price they can get to divest the risk?
Overall, I think if this product becomes very well utilised in the market place, it will be great for opportunistic property investors for the above reasons – but I have to wonder about the banks…they have a chequered history as far as full disclosure of risk upfront, esp in new product lines.
And I have to say, if I was going to take a risk like this to borrow a measly 20%, I much rather take it for 60%! [
]Kindest Regards
Jason S
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Check out my E-Bay Auctions:
http://cgi6.ebay.com/ws/eBayISAPI.dll?ViewSellersOtherItems&userid=jayess70&include=0&since=-1&sort=3&rows=25Leigh,
Thank you for that – it would seem that the fruit of your enquiries is: “Attitude is Everything”! [
]Kindest Regards
Jason S
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Check out my E-Bay Auctions:
http://cgi6.ebay.com/ws/eBayISAPI.dll?ViewSellersOtherItems&userid=jayess70&include=0&since=-1&sort=3&rows=25Hi All,
Birdman mentioned Baliff/Sherriff auctions – one strategy I was toying with was approaching those whose properties are to be sold via these auctions before the due date, finding out how much they owe, and tailoring a solution to their problem…see Steve, I was listening! [
]Kindest Regards
Jason S
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Check out my E-Bay Auctions
http://cgi6.ebay.com/ws/eBayISAPI.dll?ViewSellersOtherItems&userid=jayess70&include=0&since=-1&sort=3&rows=25
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