Friends, throwing the box wide open this morning, and calling a spade a spade, and on an important matter which a number of clients have emailed me about over the weekend.
There was an article published over the weekend by all the major publications, titled "If you have extra money in your mortgage, get it out now!" which has created a little panic, and unnecessarily so.... I want to put your mind at ease, and let you know, you can save the panic for more important things of impending emergency, such as being chased by a shark, or a lack of coffee in the cupboard, either of these qualify for hitting the emergency button.
This kind of publication is scare mongering, putting the wind up people like the revelation is something new and imminent, which it really is not.
To be clear, all contracts disclose that the bank can make changes to the limit, and repayment, and due dates of repayments, etc etc, to ensure that they comply with the contacted term, and there is not an impending and imminent cancellation of your savings sitting in your home loan or your offset account about to occur that is going to effect every home buyer in the country.
In fact, if a bank wanted to, they could sweep funds from any account that you have with them, and dump it into your loan if the loan is out of order, and the current status and the bank failing to take action would mean they failed to keep their contractual obligations, and you had failed to meet yours! This, is not anything new either, and has been happening for well over 30 years. It is not something that occurs very often at all however, as it is not something the banks like to do.... really bad PR! But, if you were at risk of foreclosure on your home, and the bank could see that they could help you protect your home with savings you had sitting in another account, they will try to protect you from yourself, if you hadn't used the funds already to avoid that foreclosure.
My advice? Let it go, it’s always been like this, and there is no point to this article other than to create panic. And, if you want to talk about it further with me, to discuss risk mitigation, call me, let's discuss, or even better, let's discuss over coffee, because coming to the realisation that there is no concern is even better with coffee, refer paragraph 2!
Rachael Bland – Founder & CEO