[PollyannaParticipant@vansprangJoin Date: 2017Post Count: 3]

January 26, 2017 - 12:56 am

Thanks Corey,DT and Terry. We are going through the revaluation process at the moment, and waiting for financials to be finalised, so I am still in the “finding where we stand” section of this journey.
Bank has paid for the valuations-1st plus.Hopefully they will give me the valuations if I request them, as they have in the past. Financials are still looking good enough-2nd plus.
Our best hope therefore is the refinance option with extension to the loan term, for an extra 10 years( original loans were only 20 year loans as previously disclosed)As Terry said, yes we will have to service these loans, until we can start our sell off, and the Principal component obviously will not be a tax deduction, if IO is not available.However, the principal component should not be that large in the first few years, allowing us to still use the negative gearing of the IO component. I do want to be prepared with all the information I can gather,to make it clear that I am prepared to ditch our 30 year banking relationship,if they make it too difficult,but I have to be able to back this up, if they still refuse to step outside their new box.

Bearing in mind that this is a 5-7 year retirement strategy, and not a wealth accumulation strategy:

1- All loans are X-coll,a horrible reality, but a very advantageous strategy at the time.Unfortunately it means that the 5 properties we thought we owned, aren’t really owned at all.Fortunately it does mean the the LVR should still hold favourably, as it will be taken across the entire portfolio.
Question- if a refinance is on the table, should i try to uncross the 6 remaining loans,or is this not important/or possible at this stage of debt reduction.We plan to sell 3 of these encumbered properties anyway- 2 at devalued prices and 1 at an increased price, to balance loss against gain.I don’t believe an other lender would take out stand alone loans on some of the devalued properties without some form of xcoll,or hefty deposit to get the LVR down to their acceptable level, anyway. (How the banks distribute their “held X coll security” was a real eye opener.I was shown the security graph by my manager.The majority of debt is held against our PPR, even though we paid it off 15 years ago.We have always had the ability to direct excess funds of sales to which ever account we chose, however, whether that was for our own use or to pay of other loans)

2-We have to provide a statement of position-first time in about 10 years-for the overview. We have accounts with other banks,as a strategy to not have all our money with the same institution.
Question-is it a legal requirement to disclose all assets held? Is there a chance that my bank will request a transfer of all our funds, to their accounts, as more security to be held over our loans?Can we refuse to do so, and if so, is there any benefit in doing so?

3- As naive as it may seem, we have never dealt with brokers.We ran a business, and the bank was always very compliant with our needs.Do investors generally deal with brokers online,or stay with brokers in their own locality? I realise that brokers make their money from the deals they forge with their lenders, but does this apply to interstate applications? If my bank disappoints me, I will be looking at other options.

4- Regarding age restrictions and new loan lending.I believe it is now illegal to judge an application based on the applicants age.Rather, serviceability, income,income security ,relationship etc are the main criteria for the application.Can someone clarify this?

Thanks all.

• This reply was modified 7 years, 3 months ago by  Pollyanna.

[PollyannaParticipant@vansprangJoin Date: 2017Post Count: 3]

January 18, 2017 - 1:53 am

Thanks Corey. Your last sentence hit the nail right on the head. we have been property investors for the past 20 years,and age has crept up on us. Nearing retirement, the substantial cashflow has gone. Everything has gone according to plan, except this curve ball which has been thrown. 10 years ago, IO loans were the next best thing, freeing cash to allow more properties to be purchased. Yes, I did follow all the forums, and decided to follow the IO and then live of equity strategy. All works great, EXCEPT, the IO for over 10 years had been scrapped, and the values have suffered greatly from the downturn( rural areas) P and I for 6 properties is going to hurt us badly, as I am sure it will many others in the same boat.i feel we are near the bottom of the market, in our area,and selling off slowly , over the next 5 years, would be the smartest thing to do, rather then having to fire sale. If the loans are refinanced for an extra 10 years( 20 year loans currently), does this then reset the loans and enable a further IO term? Our income is still fully able to service IO, but not an extra $1ok per month!