Can the banks make us change our loan??

[Bandita]

Hi all,

Our IP had a 1 year IO in advance loan on it which ended in June 2006, it was meant to rollover into a P&I loan, and we advised we wanted it to remain IO (variable with offset account). They asked how long we wanted the IO period for, we said what's the longest we can get, they said 10 years, we said great, signed the loan papers, done.

Yesterday, got a call from our bank manager saying there's a problem with the loan - because had LMI, you can't have IO period for longer than 5 years (including the IO in advance year), and so if we want to keep the IO period at 10 years we would have to pay an additional $5k in LMI. We said no thanks, so she said they would rewrite the loan for 3 years 9 months IO.

I know we can just refinance after the 3 years, 9 months time - and by then the value would be under 80%LVR so wouldn't need LMI - but I'm wondering if the banks are allowed to just change your loan on you like that? This is with ANZ breakfree package.

Thanks for your help!

Cheers,
Jen

 

[Simon]

I would be telling her that you want the same terms and costs as per the mortgage contract you signed.

If she baulks then make a call to the Banking Ombudsman. Even telling your manager that you will be calling may be enough to get her to put your file away and let sleeping dogs lie.

 

[Bandita]

Thanks Simon,

Is it too late? I believe she's already created the new documents and sent them out - when we receive them, do we just call them up and so, no, we've changed our minds, we want what we've already signed?

Do I contact her (from the Heidelberg branch)? She's been so bad in the past (offset account not set up properly, extra fees, not getting back to us, etc), I've been calling the North Melbourne branch and using some great guys over there.

Can they continue to threaten extra $5000 fee for LMI?

Cheers,
Jen

 

[Simon]

I really do not know if she is able to do this or not.

But that wouldn't concern me.

I would be thinking whether I want her to do this or not and act accordingly.

She might get in trouble from someone for making errors but that is hardly your problem. In fact it I doubt she is fixing this out of a sense of duty - more likely someone has picked up her mistake and she is trying to patch it up to save her ****.

If she wont fix it don't waste time talking to her. Ask to speak to her supervisor and keep going up the chain until you find someone who can file the whole thing where it belongs

 

[RichardC]

My take on this would be that until it is duly signed by both parties it is a "proposal" and as such is not binding on either party.

They have the right to change it and you have the right to walk.

 

[Simon]

If the original mortgage contract has been signed by both parties I shouldn't think they can change it without your agreement. Unless of course they have a squirelly loophole written in by their legal people (to paraphrase Dazzling). Even if they do I still reckon it is morally indefensible to call in the debt well after the loan is settled and you have been making all payments - esp given it was always their error.

Have a read of the contract and don't go down without a fight. They are just banks - not like anyone will go hungry if you don't cough up what they demand.....

 

[ggumpshots]

You signed the loan papers.
Are they papaers to be approved by the bank or were they final documents entering into a contract.
if the latter then you and the bank are bound by the agreenment until you both wish to exit the contract.
Ring up a different branch and find out if either party can walk away from the documents you referred to, if they want to>

 

[Bandita]

Thanks all,

I left a message for the lady from Heidleberg to call me, which of course she hasn't, so gave the North Melbourne branch a call (by the way, anyone looking for a good ANZ branch, these guys have been great!!) and he said that didn't sound right at all, and we're having a meeting on Monday, I'm to bring in all the loan documents, etc, and if it is indeed not right for them to try and change the loan after the fact, he'll call the manager over there and deal with it for us

Thanks again!

Cheers,
Jen

 

[Simon]

Good on you mate.

 

[grossreal]

hi JenD
my advice is never sign anything without some sort of legal advice
and if you have got that legal advice and the goal post have moved
get your legal advice to tell them to move the posts back.
it depend what you have signed.

 

[Bandita]

Thanks again all,

So I'm home now, and actually have access to the loan documents, can you advise if this is good enough to prove my point?:

23 June 2006:

Dear JenD :

Your ANZ Residential Investment Loan

In accordance with the terms and conditions of your Loan Offer on 23 June 2006 for your Residential Investment Loan, we wish to confirm the advance of your Loan and the following details:

Loan account number: blah blah
Date of advance: 23/06/2006
Applicable interest rate: The ANZ Ripl Index Rate less interest margin of 0.60%pa
Annual percentage rate: 6.97%
Repayment amount: Interest only
Interest Charging Method: Redirected to your nominated ANZ account
Repayment Start: 23/7/2016
Repayment frequency: Monthly
Loan Term: 28 years, 11 months
Scheduled Maturity Date: 23/05/2035

Signed by Terry Thorneycroft

Now, within the loan documents (which are actually dated 21 June 2006 - could this be a problem??), it says:

Lenders Mortgage Insurance: $0.01, payable on the date of advance. This fee is payable to ANZ Lenders Mortgange Insurance Pty Lotd.

and a bunch of other blah blah

This is signed by the Heidleberg bank manager who is now trying to get us to change the loan......(she - amazingly! - did leave a message on my voicemail today returning my call - I'm thinking I'm going to go straight to the North Melbourne Branch however? They've been so helpful in the past....I'm too nice, and she will talk me out of it i think )

I like the 10 years IO, and would prefer to keep it as long as I can......is it weird the loan acceptance letter and loan documents were dated differently? Maybe I'm missing something??

Cheers,
Jen

 

[kissfan]

This is signed by the Heidleberg bank manager who is now trying to get us to change the loan......(she - amazingly! - did leave a message on my voicemail today returning my call - I'm thinking I'm going to go straight to the North Melbourne Branch however? They've been so helpful in the past....I'm too nice, and she will talk me out of it i think )

Hi Jen.

My suggestion is to deal with the branch that is going to give you what you want, which in this case sounds like the Nth Melb branch.

Also, ensure that whoever you deal with at the Nth Melb branch gets in touch with your contact from the Heidleberg branch to confirm what has been done, just to make sure all loose ends have been tied.Who knows what might happen with two lots of documents floating around, signed or unsigned.

Regards
Marty

 

[Rolf Latham]

Hiya

One snag that I see here is that the IO period is not specified.

Another one is that while ANZ offers 10 year IO terms, GENERALLY, the max IO term for LMI loans is 5 years.

Worth persisting because of what you have been told though

BTW, if ever you read a loan contract and the memorandum of mortgage end to end, you would generally not sign the agreement. Its very one sided.

Ta
rolf

 

[Bandita]

Thought I'd give an update of my interesting afternoon with ANZ,

First I'll just answer Rolf's queries (in red):

One snag that I see here is that the IO period is not specified. luckily of us, it is: in repayment terms: it says 120 months of interest only......followed by 226 monthly repayments of principal and interest of $xxxx, followed by one final repayment of $xxxx

Another one is that while ANZ offers 10 year IO terms, GENERALLY, the max IO term for LMI loans is 5 years. Yes, this is the problem, it's obviously been a mistake that's slipped through, 5 years is max, but we've got a signed loan document that says 10

Ta
rolf

So, had the meeting with North Melbourne, the bank manager was quite confused as to what was happening, wasn't sure how we got 10 years interest only to begin with, as it's max 5 years, as Rolf mentioned. But he read through the loan documents, and yes, you've got youself a 10 year IO loan. So he called Josie from the Heidleberg branch to work out what was going on. Came off the phone none the wiser really.

So he told me I had 2 options (as the new loan offer she sent me I was in no way signing because it had .6% discount instead of .7% discount as we have now, and was for 3 years instead of 3 years 9 months - the remaining period of IO we were allowed without paying LMI - as the 5 years included our 1 year Fixed, IO in advance):

1. Dig your feet in, fight it, don't compromise at all. He said this would involve a lot of correspondence and contact, was up to me if I wanted to fight it, said it might be a long road.

2. Say, look, you've made an error, and compromise to 5 years IO from today, no fees, .7%off. He thought we'd be able to get this pretty easily.

I initially said look, I want what we have now, Option 1, but then decided the compromise would be ok, 5 years from now is enough, wasn't really interested in getting the bank upset and dealing with all the correspondence. I left it with him to call Josie and organise the new compromise.

Just got a call from Josie from Heidelberg, which angered me enough to say nope, we want what originally had, not changing a thing. She didn't want to compromise, she said you can have your 5 years, but then you have to pay extra LMI and blah, blah all this stuff she's done for us (we're talking about the same person who DID NOT setup our offset account properly and has never returned my phone calls, causing me to go to the North Melbourne branch to get things fixed to begin with!)

So I said, No, rather than have 5 years and pay additional LMI, we'll keep the 10 year IO loan we have now with no fees, thanks.

She got quite huffy and pretty much hung on me after telling me again all she'd done for us and complaining about us going around her to the North Melbourne branch.

So, I'm not exactly sure what's going to happen from here.....anyone had to deal with a bank trying to change your loan before?

Thanks again for the help!

Cheers,
Jen

 

[Rolf Latham]

Hiya

Id go for the 5 year with no fees option and 70 pts off .................if you can put up with a long battle, then try it with the 10 years.........

I reckon you might just win if you can outwear them, and convince someone in credit to allow it.

Ta

rolf

 

[The Y-man]

HI Jen,

Sorry I'm a bit slow, but I am wondering about the importance of having a 10year IO as opposed to 5 years? I thought you could roll over fixed periods as they expired without any costs etc (just one form, no fees from memory?)

Cheers,

The Y-man

 

[Rolf Latham]

Hiya Y

Sometimes yes, sometimes No.

With many lenders this requires a new loan app.

if your circs have changed, or money supply has become tight, you might not be able to get the renewal.



ta
rolf

 

[Bandita]

Hi Rolf,

I was happy to go with the 5 years, no fees, .7%off, (as North Melbourne thought they would do to make me go away ) but the Heidleberg branch called me after my meeting and said No, they wouldn't do it. I could have 5 years, but I would have to pay additional LMI fees. So I said nope, I'll stick with the loan we have now, 10 years with no fees, which was all signed and put into place back in June (they've just realised their errors now, I've been making payments on it for 3 months).

Don't know what they'll do now though.....??

Cheers,
Jen

 

[Bandita]

Hi Y-man,

We'd go with 5 years, but they're only willing to give us 3years and 8 months - meaning we'd have to refinance at that time, and if the market doesn't move at all (I expect it will, but just watching out for ourselves) and our LVR didn't drop to below 80%, we'd be up for additional LMI. With 5 or 10 years (as we already have now), that gives us more time.

It a variable interest rate, not fixed - don't know if that makes any difference?.

Cheers,
Jen

 

[The Y-man]

We'd go with 5 years, but they're only willing to give us 3years and 8 months - meaning we'd have to refinance at that time,

Cheers,
Jen

Thanks Jen and Rolf L. - I didn't know that they required new apps. It's been pretty painless rolling over our IO periods (just a quick form to fill and send) so we must have got pretty lucky.

Cheers,

The Y-man