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My 2 brothers borrower 100k each in the good years to purchase property. The current rates of interest they are paying is 5.2% They got the loans based on the value of 2 half acre sites they have but there is no planning on these site. So the real value of these site are between 5 and 20K. They are in A3 zoning so if they decided to sell they would be very limited buyers. In the good years the bank were told they had a value of 110K
They bought 3 properties abroad totalling 200k. The banked phoned them last year saying the loans will have to be brought down. So they sold 1 property for 55K. The bank manager told them he would put this in a deposit account @2% interest. In time it would be like money saved they said as they are paying capital and interest on the 200k.
Before Christmas my brothers contacted the bank and asked for the 55k to payed off the 200K loans instead of leaving it in a deposit account. The bank said no. They asked why and the bank told them that it was stated on a new contract they had signed when handing in the 55K that it was to be left there. This was never explained. When my brothers asked is there anyway out of this they said there is. My mother owns 50 acres of land they asked for the security of this. The banks problem is the loan to value does not make sense, as my brother said to them it was there fault first day to give them the money.
They are finding it difficult to service these loans now, but if the 55k was paid off they would find it allot easier.
Any thoughts on this would be appreciated.
Thanks.
They bought 3 properties abroad totalling 200k. The banked phoned them last year saying the loans will have to be brought down. So they sold 1 property for 55K. The bank manager told them he would put this in a deposit account @2% interest. In time it would be like money saved they said as they are paying capital and interest on the 200k.
Before Christmas my brothers contacted the bank and asked for the 55k to payed off the 200K loans instead of leaving it in a deposit account. The bank said no. They asked why and the bank told them that it was stated on a new contract they had signed when handing in the 55K that it was to be left there. This was never explained. When my brothers asked is there anyway out of this they said there is. My mother owns 50 acres of land they asked for the security of this. The banks problem is the loan to value does not make sense, as my brother said to them it was there fault first day to give them the money.
They are finding it difficult to service these loans now, but if the 55k was paid off they would find it allot easier.
Any thoughts on this would be appreciated.
Thanks.