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Thread: Banks asking for Top Ups..

  1. #1
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    Cool Banks asking for Top Ups..

    Hi there,

    I have a few properties in Central area , the loans are taking up with different banks .. Today one of the banks called me saying that valuation of one of my properties dropped and I need to top up $500k . Initially I took the loan of 70% . and the place rented out now .. So I have been paying my istallments quite steadily and been a good premier customer with the bank over 7 years never defaulting. I said them no way I am going to pay that 500k as I was paying and servicing the loan always in time. They said in that case they will have to take the measures .. ?? I have the money to top up if I wanted to but I would rather reserve my funds to buy some other property near the bottom in September. The question : What "Measures" they can implement ? And what should I do ? In the contract it says that the bank agrees to loan 70% of property value at any time.. which is now obviously dropped by around 25% .. so what if I do not top up ? what happens next ?

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    Quote Originally Posted by J-Dog
    Hi there,

    I have a few properties in Central area , the loans are taking up with different banks .. Today one of the banks called me saying that valuation of one of my properties dropped and I need to top up $500k . Initially I took the loan of 70% . and the place rented out now .. So I have been paying my istallments quite steadily and been a good premier customer with the bank over 7 years never defaulting. I said them no way I am going to pay that 500k as I was paying and servicing the loan always in time. They said in that case they will have to take the measures .. ?? I have the money to top up if I wanted to but I would rather reserve my funds to buy some other property near the bottom in September. The question : What "Measures" they can implement ? And what should I do ? In the contract it says that the bank agrees to loan 70% of property value at any time.. which is now obviously dropped by around 25% .. so what if I do not top up ? what happens next ?
    Local or US bank?

  3. #3
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    Please let us know which bank.

    Unless there's an overdraft tied to the mortgage, local banks has never required top-up if loan exceed valuation.

    Do you have an OD?

    Regards

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    could it be you are overstretched? either that or your properties combined have a huge debt to equity ratio

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    'Premier' Customer. Mmm..sound liked the world local bank?

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    Quote Originally Posted by gfoo
    could it be you are overstretched? either that or your properties combined have a huge debt to equity ratio
    If also got OD, 100% will definitely be asked to top up.

    If pure HL only without TL/OD, I believe bank has never asked for top-up.

    regards

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    It's a City Bank , I have no overdraft , I even have around 700k cash in the account apart from mortgage account with the same Bank . They said that according their valuation the property now is around 3m .. my outstanding loan with them around 2.8m They said I have to bring the outstanding loan down to 2.1m to keep equity 30% .. or they will take "Measures" .. the 700k cash I do not want to pay towards the loan as I have other plans for them though I have that in interest bearing account .. but I understood I can not withdraw that funds now as they are using that my cash as an extra collateral .. Sounds like they are in urgent needs for cash .. So any one can say what measures they can implement if I do not top up ? and any word from legal side ?
    P.S this is an interest servicing only loan and I offered them that I am happy to pay as a normall time loan, service and principal repayments monthly .. they still insist for me to top up ..

  8. #8
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    Unless you explicitly pledge the 700k as a collateral, the bank has no right to freeze the $$$. Move it out.

    Interest servicing. No paydown... treated same as revolving TL and OD I believe...
    Basically, hard luck, I think they got u there.
    Bank always add clause that they could recall facility anytime, regardless of reason. Not sure this "regardless of reason" has been challenged in local courts.

    Regards


    Quote Originally Posted by J-Dog
    It's a City Bank , I have no overdraft , I even have around 700k cash in the account apart from mortgage account with the same Bank . They said that according their valuation the property now is around 3m .. my outstanding loan with them around 2.8m They said I have to bring the outstanding loan down to 2.1m to keep equity 30% .. or they will take "Measures" .. the 700k cash I do not want to pay towards the loan as I have other plans for them though I have that in interest bearing account .. but I understood I can not withdraw that funds now as they are using that my cash as an extra collateral .. Sounds like they are in urgent needs for cash .. So any one can say what measures they can implement if I do not top up ? and any word from legal side ?
    P.S this is an interest servicing only loan and I offered them that I am happy to pay as a normall time loan, service and principal repayments monthly .. they still insist for me to top up ..

  9. #9
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    Woo... the fire sale is starting soon...
    Imagine you got cash in bank...
    what will they do to those who do not have cash in bank??

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    ban tat cheapo bank la... my advice: better move yr cash out asap.

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    I never pledge my cash as colleteral .. this are them saying they have to pledge that , I also think they have no rights .. I have some other loans with other banks which I always pay in time and they never ask me for top up .. I have some other freehold properties fully paid and have positive cash flow so they know I am very sound financially . God knows why they are acting this way and what can I do legally and what can the bank do if I do not want to top up the question was ?? May be they going under again and desperate for cash I do not know .. but there is a clause that the bank has agreed to loan based on 70% from the market evaluation which now dropped ..

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    Quote Originally Posted by J-Dog
    I never pledge my cash as colleteral .. this are them saying they have to pledge that , I also think they have no rights .. I have some other loans with other banks which I always pay in time and they never ask me for top up .. I have some other freehold properties fully paid and have positive cash flow so they know I am very sound financially . God knows why they are acting this way and what can I do legally and what can the bank do if I do not want to top up the question was ?? May be they going under again and desperate for cash I do not know .. but there is a clause that the bank has agreed to loan based on 70% from the market evaluation which now dropped ..
    If like that why not you consult another bank to take over your loans? Talk to other banks first before you do anything.

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    Quote Originally Posted by J-Dog
    I never pledge my cash as colleteral .. this are them saying they have to pledge that , I also think they have no rights .. I have some other loans with other banks which I always pay in time and they never ask me for top up .. I have some other freehold properties fully paid and have positive cash flow so they know I am very sound financially . God knows why they are acting this way and what can I do legally and what can the bank do if I do not want to top up the question was ?? May be they going under again and desperate for cash I do not know .. but there is a clause that the bank has agreed to loan based on 70% from the market evaluation which now dropped ..
    Transfer funds over to another bank, see if they block it and on what grounds.
    OR if you have 700K at stake, how about consulting a lawyer ASAP if you are not clear about your contract?

    Too be honest if the bank thinks valuations will drop further, and the contracts are structured so as they can always adjust the morgage according to the "current" valuations, than you have to admit it seems like a prudent move on their part.

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    Share with us which bank lei...

    Will avoid it next time.

    Quote Originally Posted by J-Dog
    I never pledge my cash as colleteral .. this are them saying they have to pledge that , I also think they have no rights .. I have some other loans with other banks which I always pay in time and they never ask me for top up .. I have some other freehold properties fully paid and have positive cash flow so they know I am very sound financially . God knows why they are acting this way and what can I do legally and what can the bank do if I do not want to top up the question was ?? May be they going under again and desperate for cash I do not know .. but there is a clause that the bank has agreed to loan based on 70% from the market evaluation which now dropped ..

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    J-Dog said City Bank? should be CitiBank?

    I read about this from some news articles before and some banks had denied they will do such things... that was before financial crisis.
    As bank become more cautious and going bankrupt, they are showing their true colours.

    Please share if other banks are doing the same...

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    Quote Originally Posted by Lucas
    J-Dog said City Bank? should be CitiBank?

    I read about this from some news articles before and some banks had denied they will do such things... that was before financial crisis.
    As bank become more cautious and going bankrupt, they are showing their true colours.

    Please share if other banks are doing the same...
    foreign qualifying banks are not bound by the same political sensitivities of local banks where the govt owns huge stakes in

    one reason in 2008 my whole family took out all monies in citi and hsbc. stanchart is the exception as it's really a singapore-owned bank

    i will never get a foreign bank loan for a singapore property
    Last edited by gfoo; 18-02-09 at 23:21.

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    I think I can say , They gave me the most competitive deal on the loan when I was shopping for one in 07' , best terms and lowest interest ..
    They asking for a top up now though , this is not that I would lose that money for all , it is still my money which would go towards my principal however I would rather spend this funds differently buying more properties towards the end of a year at the market's bottom then doubling .. actually knowing my holding power in a financial state it make me thinking that they in some sort of troubles .. they can not be so unreasonable , this is just silly of them to ask from someone who they treasure and value for a stupid top up when no other banks doing that ..

  18. #18
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    Quote Originally Posted by gfoo
    foreign qualifying banks are not bound by the same political sensitivities of local banks where the govt owns huge stakes in

    one reason in 2008 my whole family took out all monies in citi and hsbc. stanchart is the exception as it's really a singapore-owned bank

    i will never get a foreign bank loan for a singapore property
    eh.. how about Credit Suisse and UBS..
    You think it's safe to put money there?

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    Quote Originally Posted by focus
    eh.. how about Credit Suisse and UBS..
    You think it's safe to put money there?
    EU banks need a 25 trillion injection over the next few weeks/months to stay solvent. why tempt fate?

  20. #20
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    Default Advice.

    Quote Originally Posted by J-Dog
    I think I can say , They gave me the most competitive deal on the loan when I was shopping for one in 07' , best terms and lowest interest ..
    They asking for a top up now though , this is not that I would lose that money for all , it is still my money which would go towards my principal however I would rather spend this funds differently buying more properties towards the end of a year at the market's bottom then doubling .. actually knowing my holding power in a financial state it make me thinking that they in some sort of troubles .. they can not be so unreasonable , this is just silly of them to ask from someone who they treasure and value for a stupid top up when no other banks doing that ..
    I advise you to do the following:-

    1. Put forward to that bank ("Bank") to make the request to you in writing and ask that they specify which provision in the loan agreement to which they are exercising their right thereto.

    2. If such a provision do exist unambiguously to require you to top up to the Loan-to-valuation ratio of 70%, look out if there are any possible outs in terms of interpretation of discretionary assessment or if you have the right to an independent assessment. What I am driving at is to delay their right to enforce that LTV top up provision against.

    3. In respect of Pt 1 and Pt. 2, ask for a specific time frame to which you are require to provide such top up , and as before request they put in writing on the specific provision whcih provide for such time frame.

    4. Once they revert back to you on Pt. 1 and Pt. 3, so long as that deadline is not up, you are technically not in default. IF you have any cash or any account open with them, transfer all monies out immediately. This is because, as with most bank accounts in the world, the hosting bank have the right of set off any cash amounts or deposits held with them, even though your obligations might stem from other transactions or agreements completely unrelated to your bank accounts or deposits with this Bank. The Bank can only exercise their right of set off if you are in default of any form of outstanding payments (i.e. Pt. 3) due and unpaid.

    5. You should seek legal advice with your loan agreement, if you still feel strongly against the Bank on their request for you to top up.

    My guess is that your loan agreement provides the borrower to top up the loan as and when the LTV falls below X%. The agreement usually go further to specify that the determination of valuation of your property would be determined in the (i) sole discretion of the Bank, or (ii) independent valuer.

    do let us know how it went with your Bank.

  21. #21
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    Quote Originally Posted by J-Dog
    Hi there,

    I have a few properties in Central area , the loans are taking up with different banks .. Today one of the banks called me saying that valuation of one of my properties dropped and I need to top up $500k . Initially I took the loan of 70% . and the place rented out now .. So I have been paying my istallments quite steadily and been a good premier customer with the bank over 7 years never defaulting. I said them no way I am going to pay that 500k as I was paying and servicing the loan always in time. They said in that case they will have to take the measures .. ?? I have the money to top up if I wanted to but I would rather reserve my funds to buy some other property near the bottom in September. The question : What "Measures" they can implement ? And what should I do ? In the contract it says that the bank agrees to loan 70% of property value at any time.. which is now obviously dropped by around 25% .. so what if I do not top up ? what happens next ?
    No need to panic. The most they can do is to repossess your property with them. The rest they cannot touch.

    If you are servicing your loan in time + the valuation of your property is not below your outstanding loan amount, usually they will not ask for top up. Furthermore, if you can prove to them that your monthly income is at least double your total installment, then you can ask them to shut up. Because you can go to other bank without problem for getting your loan approved.

    If i am you, the first things to do it write to your lawyer (for this loan) and ask them to request your bank to provide details explanation to justify this call for top up. Plus you want all transactions to suspend on this property before this issue is resolved. Because bank cannot repossess your property without going thru that lawyer.

    By doing this, you are throwing the ball back to the bank. You can do nothing until the bank response.

    In this way, everything are black and write. Then they will be very careful in responding as it go thru lawyer.

  22. #22
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    Quote Originally Posted by Lucas
    J-Dog said City Bank? should be CitiBank?

    I read about this from some news articles before and some banks had denied they will do such things... that was before financial crisis.
    As bank become more cautious and going bankrupt, they are showing their true colours.

    Please share if other banks are doing the same...
    I guess local banks are unlikely to do this. DBS was quoted a few days ago in the papers that they will never ask for top ups.

    It is a risk taking loans with foreign banks.

  23. #23
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    Quote Originally Posted by nav14
    I guess local banks are unlikely to do this. DBS was quoted a few days ago in the papers that they will never ask for top ups.

    It is a risk taking loans with foreign banks.
    I agreed. During the last downturn (2001), I had negative equity on my loan around 100K with a local bank (my loan was 800K+, the transacted prices were around 700K tehn), I was never asked to top up. Today, I still keep my property and the value is worthed 1.1 mio+ (At the peak (07) it went up to 1.6 mio+).

    Unless you have spare liquid assets and can cough up the different anytimes, it will be prudent to use local banks for ppty loan.

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    Current bank valuation is 3m (after 25% drop) ,
    Estimated purchase price is 4m
    70% loan after 25% drop in purchase price is 2.1m.
    Remaining loan amount is 2.8m
    Hence actual top up is 0.7m

    You should be gracious that your bank did not ask u to top up 700k. If I were the bank , I would request u to top up 1m in order to cater for another 15% drop in price in next 6 months.

    Quote Originally Posted by J-Dog
    Hi there,

    I have a few properties in Central area , the loans are taking up with different banks .. Today one of the banks called me saying that valuation of one of my properties dropped and I need to top up $500k . Initially I took the loan of 70% . and the place rented out now .. So I have been paying my istallments quite steadily and been a good premier customer with the bank over 7 years never defaulting. I said them no way I am going to pay that 500k as I was paying and servicing the loan always in time. They said in that case they will have to take the measures .. ?? I have the money to top up if I wanted to but I would rather reserve my funds to buy some other property near the bottom in September. The question : What "Measures" they can implement ? And what should I do ? In the contract it says that the bank agrees to loan 70% of property value at any time.. which is now obviously dropped by around 25% .. so what if I do not top up ? what happens next ?

  25. #25
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    Pls enlighten me which rule and law in singapore enpower the host bank to settle the loan in this manner...?



    Quote Originally Posted by DW
    IF you have any cash or any account open with them, transfer all monies out immediately. This is because, as with most bank accounts in the world, the hosting bank have the right of set off any cash amounts or deposits held with them, even though your obligations might stem from other transactions or agreements completely unrelated to your bank accounts or deposits with this Bank. The Bank can only exercise their right of set off if you are in default of any form of outstanding payments (i.e. Pt. 3) due and unpaid.

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    Quote Originally Posted by i12buyhouse
    Current bank valuation is 3m (after 25% drop) ,
    Estimated purchase price is 4m
    70% loan after 25% drop in purchase price is 2.1m.
    Remaining loan amount is 2.8m
    Hence actual top up is 0.7m

    You should be gracious that your bank did not ask u to top up 700k. If I were the bank , I would request u to top up 1m in order to cater for another 15% drop in price in next 6 months.
    If the bank ask for top up which mean for future drop, i will middle finger them. And switch the loan to other bank. Ask them don't ya ya papaya. Citybank is not the only bank in Singapore.

  27. #27
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    Property buyers hit a bump on sliding valuations

    Banks slash loan amounts before disbursing them

    By SIOW LI SEN

    (SINGAPORE) The rapid slide in property prices has resulted in some banks slashing the loan amount to borrowers just before it is disbursed. This has put property buyers in a quandary, forcing them to either top up the difference or pay a penalty for backing out of the loan offered.
    And valuers have become the latest 'villains' as borrowers find it harder to get home loans to match their purchase prices. 'I don't tell people I'm a valuer,' sighed Lydia Sng, Knight Frank executive director.
    Bankers agree that the time lag between the loan offer and disbursement can result in a final smaller loan. The loan offer, while based on an indicative valuation, contains a clause that it is subject to a formal valuation.
    But borrowers who want to cancel the loan are hit with a punitive 1-1.5 per cent cancellation fee. Also, by this time, it would be hard to back out because they would have already committed to the purchase of the property.
    The wobbly market is not helping. A Citigroup report last month said that, in the high-end segment, properties have seen price corrections of about 35 per cent from a year ago and they could fall by another 30-40 per cent this year.
    Ms Sng said the problem is with the valuation process. 'They'll give us a call with the address, we'll give a range as we've not seen the property. It's a bit like calling the doctor and telling him your symptoms and asking for a diagnosis,' she said.
    Gregory Chan, OCBC Bank head of secured lending, said: 'It is possible to receive a lower formal valuation on a property compared to the initial indicative valuation. To mitigate this, as well as to ensure valuations are realistic, OCBC Bank does not rely solely on a single valuer for indicative valuations,' said Mr Chan.
    A DBS spokeswoman said the indicative value will be based on the information declared by the customer in the home loan application form.
    'In the event that the formal valuation is lower due to the wrong details provided on the property, the bank will have to take the lower of either the purchase price or valuation as per regulatory stipulations. As such, the buyers will be required to top up the difference between the purchase price and valuation in cash. If the borrowers decide to abort the purchase and cancel the loan at any point after loan acceptance, a cancellation fee will apply,' said the DBS spokeswoman.
    'We monitor our panel of valuers regularly to ensure that valuations are always fair and based on current market values,' said a United Overseas Bank (UOB) spokeswoman.
    Jerry Tan, managing director of Jerrytan Residential Pte Ltd said his beef is that valuers sometimes look to non-comparable transactions to determine the price. But it could be comparing a five-star development to a three-star one, he said.
    DTZ executive director Poh Kwee Eng said that if they were valuing a unit and there had not been a transaction in the same building for some time, they would look nearby, in similar developments. If the five-star unit was priced 20 per cent higher during last year's red hot bull market compared to a three-star one, similar premiums would still hold.
    'Say, last year, your unit was sold at $1,000 per square foot and next door a unit went for 800 psf, there was a 20 per cent difference. So if the next-door unit is now selling at $500 psf, I would adjust your unit by 20 per cent upwards,' explained Ms Poh.
    Some banks are said to be staying clear of certain developments where there is a wide range of valuations such as The Sail with 1,111 units and Sentosa Cove.
    UOB head of loans Kevin Lam declined to comment on specific projects but offered general observations about mortgages. 'We have been conservative all along. With the recent further fall in prices, we have become even more careful,' he said.
    Knight Frank's director of research and consultancy Nicholas Mak said valuations vary widely among the 1,111 units at the 63-storey The Sail. As for Sentosa Cove, 'newer developments have better views or better designs. Some earlier projects didn't have sea views,' he said.
    Some ground-floor condos sited between the landed homes with the sea front were not very different to condos on the mainland, said Mr Mak. 'The value of a sea view alone is difficult to pin down,' he said.
    Credo Real Estate managing director Karamjit Singh said that The Sail and Sentosa Cove, as new markets which targeted foreigners, provided their own challenges. 'The Sail was part of a new market that emerged as part of the development for the new downtown including the integrated resorts,' said Mr Singh.
    He said it takes time for prices to find their equilibrium, and they have not stabilised yet. 'It's a challenge everyone faces, including banks


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    My friend had 4 loan with the same foreign bank. Recently he sold one of his property and cash out ard 500k. But the bank hold back his cash saying the 4 loans were tied together and valuations had dropped and the 500k is to be used to top up the difference. I havent follow up with him and ask him how is it.

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    You are not the only person who are in this situation. There are others who are facing this problem as well. It is a very delicate situation where you will have to take proactive action else the consequences will be very bad monetarily. It might take a few months to solve this problem.

    To be honest, I do not know how much are you earning per month or what kind of industry you are in [All these plays an important part in determining the severity of your present situation]. $700,000 is not a lot of money, especially when you have 4 properties on hand. If you do not tread carefully, your $700,000 will be wiped off easily and you will only be able to see it again as cash in the coming years. With that happening, you can be sure that you will not be able to make use of any investment opportunities in the coming years.

    You mentioned that this property is serviced by an interest only mortgage. An interest only mortgage is viewed as being very risky by banks. Therefore if two properties of the same characteristic are being devalued by the same amount, the probability of the interest only home loan being called back is higher.

    If you were in a economy that is functioning normally, your relationship manager will help you settle this easily. Now, I am sure that they will not bother much about you, as they will be more concerned with getting new loans to survive their monthly quota.

    Please, please do not take out your $700,000 right now. You will only make the situation worse. Much much worse. Reason being that your $700,000 is being placed as a collateral and by recalling that sum of money out right now. You are forcing them to foreclose on your house IMMEDIATELY. Keep that money there FIRST. The situation is made worse if your other properties are also on interest only mortgage. All of them will get called back.

    From what I see, your loan exposure to that "CITY BANK" is too high. You should slowly refinance your other properties to other banks.

    This is what I will do if I was you:

    1) Write up an summary on how much are you earning. What industry are you in and how defensive that industry is. Include all your tenancy agreements and state how long do they last. Next include profile of your tenants and write up about what they work as and how defensive their industries are. Your RM would be doing this for you during normal economic times.

    2) Keep your $700,000 with the same bank as of now. Taking it out prompts them to take action on you IMMEDIATELY.

    3) Refinance your other properties to other banks to reduce loan exposure. Alternatively, you should try to sell off some of your properties. It is better to close out some of your positions in the property market to reduce your leverage level and convert to cash position. I do not know your financial strength, but if you are highly leveraged, and only have $700,000, it is best to be defensive on your wealth and reposition it later.

    4) Submit the write up to your RM and request for a restructuring of your loan. Your restructuring proposal might not be approved, but you will show yourself as a co operative client.

    5) Once you have gotten your loans out to other banks, refinance and convert that interest only to traditional loan in other banks.

    6) Take out your cash and placed it somewhere if you are dissatisfied with their service.

    7) Other banks too might not accept your loan. But really, it is not the bank itself. Rather it is the bank officer who handles your loan. Imagine, a green horn mortgage banker who takes your application will immediately throw out your application, not because he doesnt want your business, but because he does not know how to handle manager and credit department.


    Do not think that banks will not call back on your loans just because it is a local bank. Of all the loan contracts that I have handled, I have never seen one that does not include the clause of calling it back. Never. No matter if it is a foreign or local bank, if its profit takes a massive hit, and your property devalues significantly, they will still have to call it back. Everything's in black and white.

    Be careful of each and every action that you will undertaking to solve this problem. This is a Cha Cha game. Your every single action is reciprocated by a certain response by the bank officer. They are trained to act like that. Everything is "This is our upper management's decision". Of course not every bank officer is like that, you have to find one to tide you over this.

    Mortgage Advisory and Brokering Services
    http://www.cpcgonline.com

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    yipee! firesale!

    J-dog
    If you want to let go 1-2 of your property, let me know.
    But given what you earlier advice on the mkt conditions, i will only buy at probably 50-65% haircut. And dont be a stubborn seller like those D15 ones, okie? Things might just get worse!!


    Quote Originally Posted by i12buyhouse
    Current bank valuation is 3m (after 25% drop) ,
    Estimated purchase price is 4m
    70% loan after 25% drop in purchase price is 2.1m.
    Remaining loan amount is 2.8m
    Hence actual top up is 0.7m

    You should be gracious that your bank did not ask u to top up 700k. If I were the bank , I would request u to top up 1m in order to cater for another 15% drop in price in next 6 months.

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    By lyn in forum Finance and Legal
    Replies: 26
    -: 09-07-09, 12:09
  5. It's still mostly about banks and property
    By mr funny in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 11-10-06, 09:25

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