Out of the frying pan?

Crikey! Time's flown since I was last on here!

Been pretty busy at work, and some of the stuff I'm doing is great to be doing. Well most of it is really, even the less great stuff... like making lots of repeats of stuff. One of the guys there is a stereotypical 'whinging Pom' I'm sad to say, and seems to find things to complain about all the time. I told him that he should try being out of work for a while...

Having said that, I'm not really doing any repeats... only the more interesting jobs ...so far at least.

House sale

A few weeks ago we completed the sale of our rental house. We were finding it difficult to pay out, and watch all our hard work making the place presentable be trashed by the tenants who didn't seem to give a s**t about it, and were rude to us into the bargain.
After some difficulty, we managed to get figures from the bank that showed what they'd done with the money.
Now those of you who are familiar with the selling of property in the UK will know that when you exchange, the solicitors pay the dosh into your bank and the mortgage is paid off (you hope). Well guess what... ! They don't do that in Oz! Here, what they do is they put the money into the account and still charge you interest. OK... not a problem, you just pay it back right? Wrong! We had two thirds of the money that we'd borrowed as a fixed rate loan. We looked upon it as a mortgage, but here they call it a home loan. Ending the term early incurs penalties.

We understood this when we took it out, but figured that based on the sort of money these things had been in living memory... or at least financial market memory, which is considerably shorter than a small child's and fractionally longer than an ant's...it was worth it. We'd been led to understand that it would more than likely be around a couple of thousand to get out of it.

But of course we weren't counting on the interest rates dropping. Nor were we aware of how the banks (aka legalised loan sharks) think. The way it works is:

1. You enter into an agreement.

For us it's a loan of 'x' which we may or may not want for 5 years but which we are prepared to take a risk on the interest going 'in our favour' rather than theirs, and pay the get out if we need to sell the house before that. (It's worth noting that most people sell their house every 7 years on average in the UK)

For them, it's a guarantee that we will pay them a fixed amount for 5 years and apparently, the rate that they gave us ( a whopping 1% below the standard rate) is based on their being able to calculate their cash flows over this period.

2. If the loan-ees, (hereinafter known as the lambs) decide to close out the loan early, it is therefore perfectly reasonable for the bank to charge them (hereinafter known as the slaughter) a percentage of the interest that they had calculated that they would earn over the remainder of the term - EVEN though you've given the money back. The idea sounds reasonable enough until you see what happens in a recession!

Our locked in rate was a full 2.5% higher than it is currently. If they re-loan the entire amount that they loaned us to some other lambs, then they can only slaughter them for the lower (current market) rate. That leaves them a shortfall on their projections for that parcel of dosh that comes to....

wait for it...

$17,300!!!

Yup you read it right! That's how much it would have cost us to close our loan the day that they told us. The loan value (if you're interested and like the maths was $190k and we had about 3.5 years left on the fixed rate (hereinafter known as being tied to the rails) Since then the rate has got worse and better and worse again. The last time I looked it was about $14,600.

So we figured there were three options open to us.

1. We could sue the major Australian bank, that would of course be in league with all the other major Australian banks - especially given how much money would be at stake if they lost and everyone else joined in.
2. We could pay off the money and lie in a pool of blood and lambswool on the floor of the abattoir... or
   
3. We could keep the money and get back to building our house. I mean, lets face it... they would never lend us money again under our current predicament with work being so intermittent and NOT A PROPER JOB - so the chances of us building our house any time soon are VERY slim... unless!!!!!!
   

So that's what we decided to do! Only problem is... we're back to square one. We still have to pay the loan every month, and now we don't have anyone paying some of it in rent!

Better get a move on and get the thing done!

To whit, it's in re-design, to be a stage build, so that we can build a slimmed down version, and get into it, with what we have available. I hope I keep working!