Hi all,
I've just gotten my mortgage agreements done for Blizne and Galeria Park 2 (wohoo!)...
As expected in these tough times, banks seem to be cracking down on risk and putting in new terms to enhance their protection. My mortgages are with Noble (same bank I have gone with previously).
In these two new agreements, there seems to be an interesting new "Money Transfer Agreement" clause, which is apparently a sort of "deposit" or "blockade" as my broker calls it - it is insurance for the bank to keep for the duration of the loan, to protect against non-payment (isn't this what the secured collateral is for in the first place?). So in effect, instead of the 10% down that I should expect to pay on a 90% LTV mortgage, I am actually paying 15% down because of this additional deposit, effectively reducing the LTV to 85%!
To make matters worse, this amount does not actually give me any further equity - it is simply a deposit held in a standard 6% interest bearing account. I still only have that original 10% of the equity. I think this means that if the property grows at anything better than 6% per year, I am actually worse off than if I had a straight 85% LTV mortgage with no "blockade" attatched to it.
Just curious to see if anyone else has seen clauses like this in their recent agreements, or if this is completely normal and I'm just missing the plot.
FYI here's some more detail - some correspondence with my broker to confirm all the details...
1. I have to pay commission amounts to Noble:
3,994.55 + 4,096.75 = 8,091.30 - yes
2. I have to pay "Money Transfer Agreement" amounts to Noble (what is this??):
23,500.00 + 22,500.00 = 46,000.00
- this is only money blockade on your account in Noble Bank. Those are your money but you can't use them to the end of this loans. Interest of this money is 6,04% in this time. When you pay off your loan, Bank will dismiss blockade of your money and will give you back your money with perecentage. It is kind of bank investment. Noble Bank is affraid of not payings instalments of the loan. So if you want pay your instalments Noble Bank can use this money to pay part of your loan.
3. I have to pay "Borrower's contribution" remainder - only on Blizne Park, right?
8,577.65
(I pay this directly to Budimex, right?) - Yes
4. Noble will pay me the remainder on Galeria Park (Obrzezna)
78,216.72 - Yes
5. Noble will pay tranches to developers - Yes
6. Noble will pay finishing tranches to me - Yes
Could you please confirm this is all right? And I need to pay all of #1, #2, and #3 now, right? - Yes
ES