Should I Close my bank Account When I sell Property & Open a New One?

Discussion in 'Accounting & Tax' started by Gonx, 5th May, 2017.

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  1. Gonx

    Gonx Well-Known Member

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    I have had a tough few years financially. I expect to sell my property soon and finally get my life back on track again. I did spend a lot of time considering selling over holding and renting it out again but after I looked at all options on paper I decided it was best to sell plus I could not hold on much longer as my bills were getting out of hand. I held onto it for as long as I could and it got a decent amount of equity built up but nothing like in Sydney. My plan is now to pay all my bills off and the mortgage and use the money to map out my future. I'm not that young anymore but quite active and healthy still. I got a good price for my property so I'm excited for my next chapter.

    I'm still considering all options, the most likely ones are to buy a cheap "rural mid population growing" property well below asking price for cash after making multiple offers until I get a real bargain. I have been researching these now for several months and have a great database of potential properties to look at. I would then renovate and rent out then move onto another etc ( I have experience with this). I can build some income streams up then in a year I would like to borrow again to start to move up a few gears.

    I have not missed any mortgage payments but I have had a couple of 3 month holidays and they gave me a few half payment months. They have also allowed me 2 months now with no payments as the property gets sold.

    I had a credit card debt that I closed long again at around 8k left now and I have been chipping away at that for a year or so.

    My strata was over 2k behind and rates around 1k.

    I have had a financial councilor to help and I have communicated myself with all creditors and kept up some regular payments.

    The good thing is my credit file is fine as I checked it recently and there has been nothing to harm it since.

    So now I would like to know, once the property sale is settled and once the money left over from all bills is paid should I close that account with that bank and open a new bank account somewhere else? The thing is I see this bank have told me in the past when I asked for my cc to be closed and go on a payment plan, I asked if this would effect my credit in the future? They said it won't but the bank will keep a record of it for internal use or something. I think it will be the same for the mortgage. As I said no mortgage payments were ever missed, just had some help with some holidays etc.

    This is a major bank so if I do close it then I would hope to be able to use them again in future years and my records would have been deleted by then or maybe not? Or should I stay with them and ask them what would be my chances to get a property loan in a year if I show good income for the next year?

    What would be the best thing for me; to work with the current bank or to close the account and move to a new one with a clean slate? Maybe have 2 bank accounts and split it? I'm still researching what would be the best account for me to use to hold the money as well until I decide my investment strategies which could include some in shares, some in term deposits, some in super and the rest in property.

    All my accounts are with this bank including super. my account is an offset account, originally investor but now the property has been my ppor and have been paying principle where at first it was IO.
     
  2. Gonx

    Gonx Well-Known Member

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    I could not edit my post but I meant to say my main goal here is to build up a good credit with the bank I choose so I can borrow again in the future to invest in property.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    This is in the tax section, but I can see no tax issues that could arise.

    on the lending side of thing that bank will likely not want to lend to you again in the near future - maybe even the distant future. If you wish to apply for a loan in the future I would suggest you just avoid this bank and go to another. I had a client who defaulted on a loan about 10 years prior, never told me, and then we went back to the same bank - rejected outright.

    From a legal point of view I can't see any issues either if you have paid your debt then they cannot come after you. But if there are debts remainnig they could garnish accounts.
     
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  4. Stoffo

    Stoffo Well-Known Member

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    I keep an account with another bank at all times.
    As i can then find a branch to walk into to withdraw from (after moving funds via internet banking)
    Same applies with finding a no fee ATM :D

    So yes, open an account with another bank :cool:
    Treat it as a back up account even
    Make regular small deposits to show savings ;)

    Once settlement has occured, if your current bank even looks at you funny, move the funds :p

    I moved the whole settlement amount for a purchase from one bank to another because it had a local branch, they were on the phone within hours offering to "help me with my new found wealth" o_O
     
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  5. Marg4000

    Marg4000 Well-Known Member

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    Once upon a time loyalty was rewarded.

    Nowadays it seems the best offers are reserved for "new" customers.
    Marg
     
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  6. Gonx

    Gonx Well-Known Member

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    thanks a lot for the feedback.
    oh sorry, yeah I seen Finance but then thought it might be more suited to "Accounting", if the moderator prefers or thinks it's better to move it then please do.
    Wow, 10 years, geez sounds grim. I have not actually technically defaulted as I have always communicated with them and made arrangements like holidays or a few days late etc.
    All bills including the mortgage and cc debt will be completely paid out at settlement, my solicitor is arranging that. I will also meet an accountant next week to help with late tax returns and to give me advice on cgt for the property sale. it sounds like I will not have much cgt to pay as my income has been low in last couple of years and it was rented out just over the 5 year cgt period from scratch with a small reno live in for a few months in between and I have lived in it for last 1.5 years.
    I usually do when I have had plenty of money in the past but when money was scarce there was little use for extra accounts.
    it will be nice to say goodbye on my terms and with a nice chunk of cash which I'm sure they would not mind having.
    totally the way it is now sadly it seems.

    So anyway from what Terry has said it looks like I might as well write the bank off and never use them again in my life. So 1 down 3 big banks to go. This will be the last time I will ever get in this situation again but at least I still have 3 major banks to choose from if needed. It does slightly limit my options in the future when things pick up in a few years and I'm buying lots of properties, then it might be a nuisance to have one bank I can't use anymore.

    From my understanding some banks are in partnership with other banks like St George and Westpac, what about NAB, Commbank and ANZ, do they have other banks that they work with and can access customer records?
     
  7. Gonx

    Gonx Well-Known Member

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    I meant 6 years like in this article from Terry Tax Tip 23: The 6 year Absent from Main Residence Rule

    I just realized it was rented out for less than 6 years, about 5.5 before I moved in so it will just be a little for those 6 years? oh but then I let the vendor stay on and rent out when I first bought it as she was on the DSP and said she needed to stay and pleaded with me even though I wanted to reno it first. looks like it might be a costly mistake?
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If you have never defaulted with them then they may not be so harsh with you later on if you were to apply for finance again, but there are plenty of lenders out there and I would suggest you would be more successful with a different one.
     
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  9. Gonx

    Gonx Well-Known Member

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    Also, is it worth me finding someone in my current bank and sitting down and talking to them. Something like "hey I have a fair bit of money to bank,I'm happy to continue to bank with you as long as you can give me something in writing to say in 1 year if my income is steady etc then you will lend to me as a normal customer" or something like that?
     
  10. Gonx

    Gonx Well-Known Member

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    I'm only thinking of the future so if I stay with them now and work out something then it least it still gives me 4 big banks to choose from when I'm investing actively in later years. If I move now to another bank they might never want me back. Or maybe it is better to move to another now and come back to them in a couple of years with a much more solid asset base and income history along with savings?

    Apologies for all the questions :)
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I wouldn't bother. Not sure they could even give such a letter.
     
  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Moving savings around will have no effect on finance at all.
     
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  13. Gonx

    Gonx Well-Known Member

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    Thanks Terry for your input.

    So now from all this it looks like this current bank needs to be written off and I will close all accounts including super once they are paid out at settlement.

    I will research what the best bank will be for me but it will be one of the other big 3 where I will hold most of my money until I work out my investment options. I might also open an account with another bank and use it as another to build up a savings history.

    As for the cgt questions, lets forgot that and keep it simple here. I will talk to my accountant next week and he can update me on those questions.

    Just one more thing if anyone can help me with this following query that I wrote earlier it would be great:

    "From my understanding some banks are in partnership with other banks like St George and Westpac, what about NAB, Commbank and ANZ, do they have other banks that they work with and can access customer records?"
    • St George & Westpac
    • NAB & ?
    • Commbank & ?
    • ANZ & ?
     
  14. dabbler

    dabbler Well-Known Member

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    If you had trouble paying, as others say, they won't be falling over themselves to lend you money, I would forget them for the time being.

    There is no reason not to use them for normal transactions though.

    Also, everyone can come into a spot of bother, if you communicated with them and you pay them back and not trying to avoid your responsibility, then that must count for something.....but...

    Just go to other lender/s, you can build a record that you can then show more lenders or repayments etc, a broker may say do not apply to them again, but leave it till you have quite a few years of good repayment evidence and a secure workplace you have been at for years as well, or many years in same business.

    Sound like your near the end of the tunnel and the light is shining, push the bike aside and move on :)
     
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  15. Gonx

    Gonx Well-Known Member

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    thanks dabbler, yes my property sold about a week ago and will settle before the end of the tax year which will be good so from July I can start with my new plans. I have decided to close my accounts with that bank but like you say in a couple of years when my finances are much better with a good income, asset building and savings record then I can look at them again if needed. I'm extremely excited and have many plans to put my money to work.
     
  16. dabbler

    dabbler Well-Known Member

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    They can only say no to you, just make sure you explain everything to your broker before they apply, either way, plenty of other options.
     
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  17. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    I would still look to borrow as much as possible up to 80% and drop the surplus in an offset. Better to have access to the cash rather than it all ties up in bricks and mortar. Usually when you need it the most is when you cant get it!

    You can keep it open just dont apply for a home loan with them.

    Would that be ANZ? Got caught out with them once with a discharged bankrupt who had an unpaid credit card with them from 15 years ago.
     
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  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Lol
    Yes anz
     
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  19. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    The elephant bank, they never forget.
     
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