What to look for when considering refinancing.
What to look for when considering refinancing.

Type of finance fit for purpose

Farm finance and business finance are each a separate enterprise in their own right to be considered in the overall management plan. It is almost too late when a bank forecloses, although one of our clients, served with a writ of possession by a bank, was the victim of gross negligence by his bank insisting that he seek “hardship relief” when what he needed was $50,000 to complete a subdivision. The bank was only stopped from foreclosing when he paid out the debt. Bank foreclosure is on the cards for a great many Australian borrowers, so they need to negotiate hard with their banks to modify their loans to protect their assets. There is generally no need whatsoever for borrowers to be sold up just because interest rates have risen. Banks were warned to ensure that borrowers could afford at least 3% interest rate rise from the nearly absurd levels to which they had fallen as the RBA tried to stimulate the economy which was slowing dramatically. Rates were not that low even back in the post WWII 1950’s. Debt relief through sensible bank debt solutions is almost always possible and profitable for both parties. Bank debt negotiation is a quite sophisticated exercise as it is a case of convincing the bank negotiators that the bank has done the wrong thing and that if the bank does not rectify that by helping out the borrower, the bank will most likely face a far more expensive   penalty. Timing is everything The best solution is for a borrower to carefully refinance before a crisis develops with the existing bank. The problem about waiting until the last minute is that by then the borrower has generally defaulted and that damages their chances of refinance. But if they move early before the loan repayments get too difficult to meet, there will be no default to muddy the waters for a new lender considering the refinance of the debt.

Terminology and lender attitudes

There is a difference in terms that can make a difference in lender attitudes. “Loan help” implies that the existing loan is just not suitable for any one of many reasons. The term “Debt Help” suggests that the loan has turned into a problem debt and those considering refinance should maybe give that borrower a miss. As in many aspects of bank loan or debt management, terminology can make a difference to the competitiveness of any loan offered.  

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