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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 23063
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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I received a payment demand letter from my bank arrears. I

Customer Question

I received a payment demand letter from my bank for mortgage arrears. I have paid them. I have 2 properties. One is on the market and the other will still have a mortgage owing. I want to use the proceeds from the sale of the first property to lower my mortgage to 51% LVR and use the left over profit as I choose to. The bank is asking that I pay all profit towards the property that I am not selling. And they are asking for our financials as well. What can I do?
Submitted: 1 year ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 1 year ago.

You will find that the bank has the power to require all of the sale proceeds to be be paid and not as you have asked. This is in their standard terms and conditions. They can also under the same terms, require that you share your financial information with them. Banks have considerable powers under their documents, and your only remedy is refinancing with another friendlier bank if that is possible. Otherwise if you think what they have done is unfair, you can complain to the Banking Ombudsman

Customer: replied 1 year ago.
Thanks. If I have another bank that will refinance me what would happen then? We were $3800 in arrears which have been paid in full. Therefore we surely do not have to pay everything to the bank?
Expert:  Chris The Lawyer replied 1 year ago.

The small print says that they can demand repayment whenever they consider their security is at risk, and therefore when you fell into arrears they must have decided this was the position. Dealing with a bank can be a very one sided process. So they can insist and your only remedy is to try to negotiate

Customer: replied 1 year ago.
if we have to pay them the total, the other bank will then refinance the mortgage?
Expert:  Chris The Lawyer replied 1 year ago.

You should first ask the new bank if they will do this, and then you could pay out the old bank and perhaps get the cash you need from the new bank