Bank loan security - release or not?

[MattR]

I had a phone call from the bank yesterday about some land they hold as security for a loan that we paid off a few months ago, asking whether we want them to release it or keep hold of it in case we need another loan in the future.

What are the pros and cons? It is unlikely we'll need another loan in the near future but is there anything to be said against letting them hold the deeds just in case we do, thereby saving the cost/hassle of setting up security again?

 

[Andy26]

I presume they have a charge lodged with the land registry, I would want it removing asap.

 

[Chae1]

Costs about £500 to get it released in Scotland! We had a house as security against overdraft and going about getting it removed at the moment.

 

[ISCO]

The bank should remove free of charge in England if land is registered..

It is a matter of personal choice. It would not bother me leaving the charge on as even a short term. overdraft will be cheaper if bank has security, however, If you have no.immediate plans to borrow money then remove it.

 

[AT Aloss]

Ask for your security to be released without delay, otherwise it could be used as security without your permission for hidden credit lines associated with your business. Your security will sit in the balance sheet of the bank until you remove it. Due to the process called rehypothecation your security (as a bank asset) could even be leveraged (or bundled into a mortgage bond) to earn the bank money elsewhere.

Rehypothecation: Meaning and Examples

Rehypothecation is when financial firms use client assets as collateral.

www.investopedia.com

 

[puppet]

Get it released. It is yours, not the bank's. If you want another loan then you have flexibility about who you deal with.
Took my solicitor almost a year to have the security removed as the bank denied ever getting his letters. I should have asked for compensation for his time.

 

[AT Aloss]

Get it released. It is yours, not the bank's. If you want another loan then you have flexibility about who you deal with.
Took my solicitor almost a year to have the security removed as the bank denied ever getting his letters. I should have asked for compensation for his time.

This is typical of how banks act. If the security was part of a mortgage bond they had sold to another financial institution, they wouldn't be able to release it until the bond matured. They don't want to tell the truth about what financial mechanisms & tools they can earn money from whilst having security over your assets. HSBC say they're the biggest bank in the world (due to the size of their balance sheet), but by rehypothecating clients assets (up to 8 times in some cases through mortgage bonds), what they really mean is that they are the world's biggest Ponzi scheme.

It's also why there are often penalties associated with paying a loan off early - in a logical world you would have thought most organisations would be happy to see a loan paid off early!

 

[MattR]

Thanks for the replies, I think I'll get them to release it

 

[Courier]

Get it released otherwise you may find that should you need it releasing at some later date then a future project gets held up......,

This is typical of how banks act. If the security was part of a mortgage bond they had sold to another financial institution, they wouldn't be able to release it until the bond matured. They don't want to tell the truth about what financial mechanisms & tools they can earn money from whilst having security over your assets. HSBC say they're the biggest bank in the world (due to the size of their balance sheet), but by rehypothecating clients assets (up to 8 times in some cases through mortgage bonds), what they really mean is that they are the world's biggest Ponzi scheme.

It's also why there are often penalties associated with paying a loan off early - in a logical world you would have thought most organisations would be happy to see a loan paid off early!

Probably why HSBC refused to refease 1 Ha of our 60 Ha of security with them when we had achieved Planning Permission, and paid for DNO connection and a confirmed offer of funding for two x 250 kWh wind turbines when the FIT was still in the high 20p per kWh rate.

Took us a further 2 years to swap to LLoyds and get just one turbine comissioned just hours before the FIT (by then at around 18 p per kWh ) was effectively scrapped in Dec 2014 - HSBC effectively cost us somewhere between £3m and £4m in lost margin .....Hey, Ho.... If something appears too good to be true then dont count on HSBC to read the due dilligence reports....

 

[AT Aloss]

Get it released otherwise you may find that should you need it releasing at some later date then a future project gets held up......,
If something appears too good to be true then dont count on HSBC to read the due dilligence reports....

It's a murky world