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Old 25.02.2021, 16:03
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A question of finance

Recently somebody I know very well was offered a house to buy. The house in question was on the table for just over 300.000 Euros, my friend hummed and hawed over it but then decided to pull the trigger and agreed.
He had it bank financed to 100% payable for 30-odd years at 1000 Euros a month.
All in all a risky thing and way to risky for me to even contemplate but it actually happened and the deal was sealed....
Only the still owner found out that the house was actually worth a lot more, so in the 800.000 Euro range and welched out of the deal leaving my friend to deal with the situation.
He now owes the money to the bank with payment starting on the first of January 2022 and no way to just give the money back as the loan canīt be paid off under 10 years and (presumably) only under massive penalties before the term is complete.
What would any of you money wizards do in a situation like this?
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  #2  
Old 25.02.2021, 16:13
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Re: A question of finance

What was the status of the house sale? Documented and notarized already? Any pre-sale agreement?


Any clause in the loan agreement with the bank that this is subject to the effective sale?
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Old 25.02.2021, 16:15
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Re: A question of finance

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Recently somebody I know very well was offered a house to buy. The house in question was on the table for just over 300.000 Euros, my friend hummed and hawed over it but then decided to pull the trigger and agreed.
He had it bank financed to 100% payable for 30-odd years at 1000 Euros a month.
All in all a risky thing and way to risky for me to even contemplate but it actually happened and the deal was sealed....
Only the still owner found out that the house was actually worth a lot more, so in the 800.000 Euro range and welched out of the deal leaving my friend to deal with the situation.
He now owes the money to the bank with payment starting on the first of January 2022 and no way to just give the money back as the loan canīt be paid off under 10 years and (presumably) only under massive penalties before the term is complete.
What would any of you money wizards do in a situation like this?
I don't believe the story, the Bank would only have given the money to the Notary on the basis the house was as security. It does not make sense.
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Old 25.02.2021, 16:18
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Re: A question of finance

It hadnīt been notarized at that point, Iīm still struggling with the exact details .
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Old 25.02.2021, 16:20
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Re: A question of finance

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It hadnīt been notarized at that point, Iīm still struggling with the exact details .
The bank have not handed over the money, or it's not a bank.
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Old 25.02.2021, 16:26
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Re: A question of finance

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The bank have not handed over the money, or it's not a bank.
No the money has not been handed over as of yet. But the contract is still valid. Can my friend simply refuse to take possession of the money?
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Old 25.02.2021, 16:29
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Re: A question of finance

From my understanding, if the bank did already pay out the money to the seller that would mean all paperwork was prepared and signed/notarized. Which would mean, the seller has no legal grounds to back down. The house is not his anymore, he sold it, he got paid, end of story.
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Old 25.02.2021, 16:38
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Re: A question of finance

There was no transfer of money to the seller and the notar was not signed, but the contracts for the bank loan were signed. They donīt care what the money is used for (as you see I am struggling with this concept)
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Old 25.02.2021, 16:48
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Re: A question of finance

It could well be that he is stuck with the loan agreement but heīd need to check the wording in detail. If the bank already committed to the loan in full and "refinanced" internally and there is no clause of the loan being invalidated if the sale falls through, the only way afaik is to unwind the deal.



The bank will for sure claim for some interest loss.
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Old 25.02.2021, 16:50
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Re: A question of finance

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It could well be that he is stuck with the loan agreement but heīd need to check the wording in detail. If the bank already committed to the loan in full and "refinanced" internally and there is no clause of the loan being invalidated if the sale falls through, the only way afaik is to unwind the deal.



The bank will for sure claim for some interest loss.
I can't see the Bank handing over the money, I would call their bluff, give me the 300k & I will pay every month but you have zero security.
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Old 25.02.2021, 16:55
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Re: A question of finance

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Recently somebody I know very well was offered a house to buy. The house in question was on the table for just over 300.000 Euros, my friend hummed and hawed over it but then decided to pull the trigger and agreed.
He had it bank financed to 100% payable for 30-odd years at 1000 Euros a month.
All in all a risky thing and way to risky for me to even contemplate but it actually happened and the deal was sealed....
Only the still owner found out that the house was actually worth a lot more, so in the 800.000 Euro range and welched out of the deal leaving my friend to deal with the situation.
He now owes the money to the bank with payment starting on the first of January 2022 and no way to just give the money back as the loan canīt be paid off under 10 years and (presumably) only under massive penalties before the term is complete.
What would any of you money wizards do in a situation like this?
Is this person or house sale in Switzerland? Why cant he ask a lawyer instead of asking you to ask random people when you don't even have all of the details?
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Old 25.02.2021, 16:55
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Re: A question of finance

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I can't see the Bank handing over the money, I would call their bluff, give me the 300k & I will pay every month but you have zero security.

That is for sure. That is why I do not understand why he should be bound to the contract as the underlying collateral is not available. They might claim for interest loss for committing that loan amount but he will - as you rightly say FMF - definitely not see the money
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Old 25.02.2021, 17:45
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Re: A question of finance

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There was no transfer of money to the seller and the notar was not signed, but the contracts for the bank loan were signed. They donīt care what the money is used for (as you see I am struggling with this concept)
This is called a personal loan where there's nothing physical to reposes in case of non-payment, no loan collateral. If someone signed for a personal loan, well it's a personal loan and no way to get out of it.

If someone asked for a mortgage and there's no house to mortgage, I doubt the bank will proceed. Why give someone 300K without anything to reposes in case of non-payment? Unless the money was asked to shady people and not a bank.
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Old 25.02.2021, 17:48
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Re: A question of finance

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This is called a personal loan where there's nothing physical to reposes in case of non-payment, no loan collateral.

If someone signed for a personal loan, well it's a personal loan and no way to get out of it.

If someone asked for a mortgage and there's no house to mortgage, I doubt the bank will proceed. Why give someone 300K without anything to reposes in case of non-payment? Unless the money was asked to shady people and not a bank.

A personal loan to buy a house? Then he must be well off
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Old 25.02.2021, 17:49
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Re: A question of finance

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This is called a personal loan where there's nothing physical to reposes in case of non-payment, no loan collateral. If someone signed for a personal loan, well it's a personal loan and no way to get out of it.

If someone asked for a mortgage and there's no house to mortgage, I doubt the bank will proceed. Why give someone 300K without anything to reposes in case of non-payment? Unless the money was asked to shady people and not a bank.
Interest rate far too low for a personal loan & very unlikely to get 300k for 30 years either.

Some sort of scam, trying to work out what exactly. I year before first payment is also odd.
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Old 25.02.2021, 17:50
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Re: A question of finance

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The bank have not handed over the money, or it's not a bank.
Unless the loan was being taken out on a different property?
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Old 25.02.2021, 17:52
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Re: A question of finance

30 years is not that uncommon in Germany f.e. for a mortgage, to secure the interest rate. You have a pay back clause after 10 years.


Never seen a personal loan granted for 30 years. But then I never worked in private banking/wealth management.
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Old 25.02.2021, 17:53
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Re: A question of finance

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I can't see the Bank handing over the money, I would call their bluff, give me the 300k & I will pay every month but you have zero security.
Which would be very lucrative, as even low risk investments would generate more returns than the bank charges interest.
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Old 25.02.2021, 17:53
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Re: A question of finance

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30 years is not that uncommon in Germany f.e. for a mortgage, to secure the interest rate. You have a pay back clause after 10 years.
Do you mean, by that, an option to pay it all up, in full, after 10 years?
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Old 25.02.2021, 17:57
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Re: A question of finance

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Do you mean, by that, an option to pay it all up, in full, after 10 years?

Yes, you can repay the open amount after 10 years, if you want to. No breakage fee or whatever
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