Are properties insured and are rates paid?
As part of the loan drawdown process, we require evidence that properties are insured, where applicable, and that our interest is noted on those policies.
Despite this, it is possible that borrowers may let policies lapse or even cancel them, and whilst there is an expectation that insurance companies will notify us of that, this does not always occur. Insurance is always checked if an event occurs with a borrower, and it is a condition of their loan that the property is continuously covered. Occasionally we will pay insurance companies to keep properties insured, with costs for this added to the loan.
We receive confirmation that rates are paid to date when we provide a loan, but this does not mean that the borrower will continue to meet their rate payments. The Local Government Act gives the councils authority to claim unpaid rates from Mortgagees, so at times we receive these rate demands.
Initially we will contact the borrower to arrange payment, but at times we will be obliged to make these payments, with the cost added to the loan. Where Southern Cross Partners has paid these rates, then Southern Cross Partners will be refunded these amounts first where the loan is repaid including where the mortgaged property is sold at a mortgagee sale.