slave to the mortgage/borrowing

fgc325j · Mar 21, 2019

egbert said:
Why on earth would the bank manager want faster repayments when rates go up?
(I don't intend to put myself in a position where the bank manager can call the shots.)

It's not improvements I've borrowed for...only freehold.
And the property I've invested in, where it's incorporated into the overall farm business, isn't earning stuff all.
None of my farming operations do.

It's all about long term security against return on capital.
While rates are so low, I might as well leave the mortgage running slow.
Any surplus cash mightn't be earning anything where it sits (roughly a 1.5% difference twixt what cash earns, and what the outstanding mortgage is costing), and the flexibility it offers is a lot handier than that 1.5%.
Fodder could go up or down, or I could go down with TB tomorrow.....who knows when the cashflow table turns
I could decide to plough a packet into the mill business - if the telehandler and the main breakdown mill both had terminal crises, the mill account would be in a pretty poor state.
I might see a purchase I simply had to have!

Re-arranging finance costs, and I suspect I'd be unlikely to get the very low rate on the mortgage again now, esp when it would obviously be for the want of cash.

I can foresee a time when subs have gone, bank rates go up, and the overall economy is in the doldrums.
I hope I have the nadgers to act fairly abruptly to shorten my lines of communication in such instance.

I am old enough to remember, as do other contributors from Pembrokeshire, that when milk quotas
came in in 1984, Barclays bank did a 180 degree turn, overnight, on the dairy industry, forcing many
to sell up to try and meet their loans. Furthermore, over the last 12 months stories are coming to the
surface about another bank, RBS, who handed some of their in-debted customers over to a subsidiary,
who proceeded, to basically, fleece them. It has also just come back to my mind about the early 90's
when interest went suddenly higher and people who had just taken out mortgages found themselves
in negative equity, handed the keys to their houses back to the mortgage holders - but - if the sale
of the property wasn't sufficient to cover the debt, the mortgage holders still hounded the now
homeless, ex-property owners.
Banks do not exist to keep you in business - their main priority is to make money for their
shareholders and depositors - anyone who thinks otherwise......

ollie989898 · Mar 21, 2019

fgc325j said:
I am old enough to remember, as do other contributors from Pembrokeshire, that when milk quotas
came in in 1984, Barclays bank did a 180 degree turn, overnight, on the dairy industry, forcing many
to sell up to try and meet their loans. Furthermore, over the last 12 months stories are coming to the
surface about another bank, RBS, who handed some of their in-debted customers over to a subsidiary,
who proceeded, to basically, fleece them. It has also just come back to my mind about the early 90's
when interest went suddenly higher and people who had just taken out mortgages found themselves
in negative equity, handed the keys to their houses back to the mortgage holders - but - if the sale
of the property wasn't sufficient to cover the debt, the mortgage holders still hounded the now
homeless, ex-property owners.
Banks do not exist to keep you in business - their main priority is to make money for their
shareholders and depositors - anyone who thinks otherwise......

Most companies are vampires who exist solely by bleeding consumers and need to be regarded in that same light.

ollie989898 · Mar 21, 2019

glasshouse said:
Most farmrs cannot afford the depreciation on £90k tractors

Brokencalculatorititis....

glasshouse · Mar 21, 2019

fgc325j said:
I am old enough to remember, as do other contributors from Pembrokeshire, that when milk quotas
came in in 1984, Barclays bank did a 180 degree turn, overnight, on the dairy industry, forcing many
to sell up to try and meet their loans. Furthermore, over the last 12 months stories are coming to the
surface about another bank, RBS, who handed some of their in-debted customers over to a subsidiary,
who proceeded, to basically, fleece them. It has also just come back to my mind about the early 90's
when interest went suddenly higher and people who had just taken out mortgages found themselves
in negative equity, handed the keys to their houses back to the mortgage holders - but - if the sale
of the property wasn't sufficient to cover the debt, the mortgage holders still hounded the now
homeless, ex-property owners.
Banks do not exist to keep you in business - their main priority is to make money for their
shareholders and depositors - anyone who thinks otherwise......

Rbs are getting found out, not before time

egbert · Mar 22, 2019

fgc325j said:
I am old enough to remember, as do other contributors from Pembrokeshire, that when milk quotas
came in in 1984, Barclays bank did a 180 degree turn, overnight, on the dairy industry, forcing many
to sell up to try and meet their loans. Furthermore, over the last 12 months stories are coming to the
surface about another bank, RBS, who handed some of their in-debted customers over to a subsidiary,
who proceeded, to basically, fleece them. It has also just come back to my mind about the early 90's
when interest went suddenly higher and people who had just taken out mortgages found themselves
in negative equity, handed the keys to their houses back to the mortgage holders - but - if the sale
of the property wasn't sufficient to cover the debt, the mortgage holders still hounded the now
homeless, ex-property owners.
Banks do not exist to keep you in business - their main priority is to make money for their
shareholders and depositors - anyone who thinks otherwise......

I'm also old enough to remember, but can't very well, since as my principal interests in 1984 were those nice lithe long legged creatures I'd lately noticed, and seeing how much ale I could hold in one go. (I subsequently discovered that the latter often hampered interests in the former)

Were those loans called in unreasonably?
I can't say.

Maybe I go through life looking at banks wrong.
If I want to borrow money, I look on it as a mutual opportunity for the bank and myself.
I certainly don't think the bank are doing me a favour lending me money.... I consider I'm doing them a favour giving them the chance to earn something on the cash they're controlling.
And as said, I try to watch the horizon to meet the crisis before it arrives.
I understand all to well why banks are in business.

Was milk paying hand over fist prior the quotas? Were businesses expanding continually?
Was there already a quota system in place for other products that needed to be kept on an even keel?
Was it predictable that something was going to change?
I have no idea, but it's useful to ask questions like that and learn from the past.

As for housebuyers who pile in on a rising market thinking it can't go wrong, then cry foul when the bank pursues them for the repayment of moneys owed....I am sorry for the human stories involved, but a debt is a debt.
Again, it's probably a good moment to review what can happen......

fgc325j · Mar 22, 2019

egbert said:
I'm also old enough to remember, but can't very well, since as my principal interests in 1984 were those nice lithe long legged creatures I'd lately noticed, and seeing how much ale I could hold in one go. (I subsequently discovered that the latter often hampered interests in the former)

Were those loans called in unreasonably?
I can't say.

Maybe I go through life looking at banks wrong.
If I want to borrow money, I look on it as a mutual opportunity for the bank and myself.
I certainly don't think the bank are doing me a favour lending me money.... I consider I'm doing them a favour giving them the chance to earn something on the cash they're controlling.
And as said, I try to watch the horizon to meet the crisis before it arrives.
I understand all to well why banks are in business.

Was milk paying hand over fist prior the quotas? Were businesses expanding continually?
Was there already a quota system in place for other products that needed to be kept on an even keel?
Was it predictable that something was going to change?
I have no idea, but it's useful to ask questions like that and learn from the past.

As for housebuyers who pile in on a rising market thinking it can't go wrong, then cry foul when the bank pursues them for the repayment of moneys owed....I am sorry for the human stories involved, but a debt is a debt.
Again, it's probably a good moment to review what can happen......

Was milk paying before quotas ?? - umm! why do you think Barclays were encouraging dairy farmers
to expand !!

glasshouse · Mar 22, 2019

My wife used to work for a bank, but she left because she was not willing to pressurise people into taking out loans that they clearly couldnt afford , which was the banks policy.

egbert · Mar 22, 2019

glasshouse said:
My wife used to work for a bank, but she left because she was not willing to pressurise people into taking out loans that they clearly couldnt afford , which was the banks policy.

almost exactly the same here, only mine wouldn't sell ppi!

egbert · Mar 22, 2019

fgc325j said:
Was milk paying before quotas ?? - umm! why do you think Barclays were encouraging dairy farmers
to expand !!

I've little idea, although I seem to recall the dairy men all had new tractors and toys, and couldn't be beaten at grass keep sales when I ventured off the hill.

fermerboy · Mar 22, 2019

poorsheepfarmer said:
does anybody else get sick of working just to pay off loans?

Yes.
Welcome to asset rich poverty my bank manager told me when we bought the farms, and she was right.
Overall it was the right move but its a long slog.
What gets me is getting a bollocking from the accountant about not buying any machinery to help with tax. And the reason I haven't is because im cash poor after covering repayments on the loans, no tax allowances on repayments unfortunately.
Luckily i dont mind 14000hr tractors.
The way things happened meant my old folks effectively cancelled their retirement plans too to help me and the business out, and for that I'm grateful but its meant a harder time for them too, at an older age.

I'd have been a lot better off getting a job the last 15yrs.

gatepost · Mar 22, 2019

fgc325j said:
Was milk paying before quotas ?? - umm! why do you think Barclays were encouraging dairy farmers
to expand !!

Guaranteed price, with seasonal variations via Milk Marketing Board, gave security of an income stream so borrowing could be taken with confidence, plus one hell of a calf price with live export in full swing, and not the widespread problems with TB to halt trade.

Cowabunga · Mar 22, 2019

fgc325j said:
I am old enough to remember, as do other contributors from Pembrokeshire, that when milk quotas
came in in 1984, Barclays bank did a 180 degree turn, overnight, on the dairy industry, forcing many
to sell up to try and meet their loans. Furthermore, over the last 12 months stories are coming to the
surface about another bank, RBS, who handed some of their in-debted customers over to a subsidiary,
who proceeded, to basically, fleece them. It has also just come back to my mind about the early 90's
when interest went suddenly higher and people who had just taken out mortgages found themselves
in negative equity, handed the keys to their houses back to the mortgage holders - but - if the sale
of the property wasn't sufficient to cover the debt, the mortgage holders still hounded the now
homeless, ex-property owners.
Banks do not exist to keep you in business - their main priority is to make money for their
shareholders and depositors - anyone who thinks otherwise......

Yes, I'm surprised that any farmer in Pembrokeshire, Ceredigion or Carmarthenshire still banks with Barclays after that dirty period. All the other banks stood by their farmer customers who were doing well again within two years.

Cowabunga · Mar 22, 2019

egbert said:
I've little idea, although I seem to recall the dairy men all had new tractors and toys, and couldn't be beaten at grass keep sales when I ventured off the hill.

Oddly, its hill farmers that have bought up a high proportion, though not all obviously, of Ceredigion farms over the last 20 years. Two of them certainly expanded by about a 100 acres a year with never a loan of more than three years before it was all bought and paid for. 'Tarmac farmers' we call them. Not one could be classed as a good farmer or even a good stockman, although there are sure to be some examples around. They are good at milking the system.

Still Farming · Mar 22, 2019

Treadmill

fgc325j · Mar 22, 2019

gatepost said:
Guaranteed price, with seasonal variations via Milk Marketing Board, gave security of an income stream so borrowing could be taken with confidence, plus one hell of a calf price with live export in full swing, and not the widespread problems with TB to halt trade.

I also remember barrens being sold for v.good prices for export to Europe, the story was
that the French preferred "mature beef".

glasshouse · Mar 22, 2019

94,95 the dairy farmers were on fire, it was good for everyone

grasslad · Mar 22, 2019

one thing I would hate is renting anything and nothing to show for it at least with mortgage you have asset that goes beyond.

DRC · Mar 22, 2019

grasslad said:
one thing I would hate is renting anything and nothing to show for it at least with mortgage you have asset that goes beyond.

If you can make a profit from renting, you can always invest in a number of things. You don’t have to own land to run a successful farm business, which many don’t grasp.

grasslad · Mar 22, 2019

I would agree with that on a supplement basis but not wholesale renting. you do have to own a certain amount though.

DRC · Mar 22, 2019

grasslad said:
I would agree with that on a supplement basis but not wholesale renting. you do have to own a certain amount though.

Why do you have to own land to farm. Many don’t .

slave to the mortgage/borrowing

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100% I’ve had enough of farming!

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