Home Loan Margin Calls

[swissfondue]

Is anyone else getting a demand from the Commonwealth Bank for a margin call on their Singapore Dollar home loan secured against an Australian property? I have just received a demand for a repayment equal to 30% of the principal outstanding ($100,000 expected to be repaid immediately).

[A$]

It is because of the decline of the A$ since property prices have not declined that  much in Australia?

[ANZ]

We received our call from ANZ last week, asking for $60,000 to be paid by today. We changed our loan from Aussie to Sing in September (we had locked in our loan at the beginning at 1.19, so thought switching at 1.15 was a brilliant move). Little did we realise the AUD was going to sink further and further into oblivion. They are saying the AUD will sink to 0.94 but will then rally back to 1.14 by the end of next year. God, I hope so!

[swissfondue]

Have you got the $60k to repay the ANZ? Are they willing to negotiate at all??

[swissfondue]

Its a function of the AUD valuation of the house falling in SGD terms rather than the house going down in value.

[convert back]

You are not the only one.

I have a friend who was asked to top up the equivalent of A$100,000 in 5 days or he will lose his house.

I was going to convert my loan to SGD but a friend of mine advised me against doing this as the exchange rate movement can wipe out the interest rate savings. I got this advise last year as well as things were normal.

I suggest you convert back to AUD as I heard that the AUD will drop to US$0.50 by Mar 2009.

[Us Too]

We are with Lloyds TSB and have three properties in UK with Sing dollar mortgages. so far, we have paid 8000 GBP to one of the mortgages and have since been asked for a further 6000 GBP towards one of the second properties. What we have done instead is get the property revalued we bought it in 2005 and did not pay over the odds for it so we are hoping that we will have a favourable valuation. The properties are in Scotland so have not fallen so much in value as other locations in the UK. Lloyds TSB have been really helpful and have not been threatening in the slightest . If we have to pay then we will I am sure in the long run things will turn around and at the end of it you have paid of a chunk of your mortgages

[and us]

swiss franc mortgage on a UK property with AIB.

We called them ourselves on Friday afternoon. Putting in GBP 10k to tide things over. They seem happy with that. Let's just hope sterling doesn't drop any more.

They didn't seem confrontational either and were have even promised to look at the exchange rates as they are pretty high compared to the spot rates.

Will wait and see what happens. We're hoping things will calm down and that we will just have taken a chunk off our mortgage.

The bank did say there were a lot of people in a much worse situation. I'm sure many didn't even see it coming, poor sods. 

[hhuhh?]

They didn't seem confrontational either and were have even promised to look at the exchange rates as they are pretty high compared to the spot rates.
 

What exactly does that mean 

[and us]

oops - don't know where that extra 'were' came from.

What I meant was we are paying 4% higher than trading spot rate - ie the values that the industry is paying and that which is being quoted for traders.

The 4% higher being the bank's prevailing rate. But 4% seems a little steep to me. It's not like going into Thomas Cook for holiday cash and expecting them to take a chunk!

 

[what happens]

If say AUD appreciates 50%.  Do they pay you margin?

Not trying to be funny, essentially you have a collateralised loan.  In the financial markets if the loan to value ration changes collateral moves in both directions, presumably if the loan to value moves in your favour (i.e. their credit risk diminishes) they give it back (or more likely would presumably allow you to remortgage should you wish).  Is this effectively collateral against the loan or is it a pay down?

Thinking of doing this on a UK property, GBP/SGD is at by far the lowest in 8 years (previous was 2.5 and has been as high as 3.2).  I don't think the govt will want SGD to appreciate much more against a bunch of currencies, GBP and AUD included. I know this is effectively a large FX bet but I think now is looking like a good time.

Thanks

[ripppoff]

oops - don't know where that extra 'were' came from.

What I meant was we are paying 4% higher than trading spot rate - ie the values that the industry is paying and that which is being quoted for traders.

The 4% higher being the bank's prevailing rate. But 4% seems a little steep to me. It's not like going into Thomas Cook for holiday cash and expecting them to take a chunk!

 

4% is way too much. I am quoted about 60 pips by ANZ - that is about 0.6%

[to what if]

if the currency moves in your favour since you converted your loan to SGD, you just convert back to AUD and will have wiped off capital from your loan.

[ANZ]

Have you got the $60k to repay the ANZ? Are they willing to negotiate at all??

We are in the midst of moving to the UK, and my husband had to resign 2 months ago when they found out he had a new job, so we haven't received a salary since then. We have used up most of our savings with all the relocation costs (which we will have reimbursed once we get to UK). We had no choice but to contact our parents and they have put $60000 on term deposit to use as security against our loan. Now we are waiting for our second margin call - don't know who we're going to hit up for that one!

[pigman]

Talk to the bank and make them aware early.  It is easier if you are having a dialogue with them.