Early Repayment Fee in excess of $6600!!

[cadence]

definitely go to another bank with a lower interest rate

I recently paid $1,800 for exiting within 3 years (if I exited within 1st year it was $3.8, 2nd year $2.8k), I could have avoided paying it if I waited for a couple months, but saw a property I wanted and changed to a bank which offered me interest rate of >0.5% lower than what I was on. Did the calculation and realised it was worth paying $1.8k to get out!

Would you pay less in exit fees if you waited a bit longer? If so, do the maths and see if it's worthwhile to stick it out for a little bit ... coz it is quite a hefty charge!

Having said that, it will be tax deductible.

 

[Bradsdad]

Sounds & smells like wholesale funds to me.

 

[cadence]

which lender are you with at the moment?
will try to stay away from them

 

[davemgraham]

Hiya

Are u positive this isnt some mortgage managed/ white label product wholesale with using bulk ING funds ?

Did u pay an LMI premium at the time of taking the loan out ?

ta
rolf

Rolf,

Long story....a broker arranged the loan, and I was told it was ING. It appears that it went through a mortgage manager called Legacy Financial (http://legacyfinancial.com.au/). More recently, a company called IDEN Group took over my loan from Legacy Financial.

No LMI was taken.

Like I said, I will recoup my loss within a year or so, and I'll be able to access more funds to allow the purchase of the next IP. I just wondered if it's worth the hassle of challenging the fees, and if anyone had done it before.

Dave

 

[Rolf Latham]

Hi Dave

k................thought so much from those rates.

The cost to the lender of establishing that loan would have been in the range of 1 to 1.8 %, obviously you would have paid some legals and other fees to get the loan going and so the figure would be a bit less than that range.

I can see why youd see this as an unreasonable cost if it wasnt made clear at the point of sale. Obviously, it is in the contract, and understandably in many of these contracts its in " 7 point type buried under 50 other clauses". But it is a contract formed between you and the lender, and it is possibly a justfiable fee.


Going back to someones reply post about RHG and the CTTT, I can understand their decision, but would have to suggest that the RHG scenario is far different from yours. The primary beef that people had with ( and still have ) with RHG is that their funding costs went through the roof due to their "lend long borrow very short model), and people that had no intention of leaving, were cornered into those fees by those rate rises.

I believe the CTTT in passing that judgement was looking to over ride contract law.

This could set a dangerous precedent, in that we would be pretty crook if a lender tried that on with a borrower.

Say you had a fixed rate loan...........and the lender says, nah sorry mate, the contract is unjust because our cost of funding has gone up and we want to get out of the loan thank you.

ta

rolf

 

[davemgraham]

Fair enough.....thanks for all the replies everyone.

 

[Indulgedbelle]

My loan was variable

 

[RumpledElf]

I'm up for $1300 total in bank fees if I sell my old house now. Most of that is delayed establishment and fees to remove that property as security from the other. They are all fixed fees - the loan is barely $25k.

Fees are the one thing that might convince me to keep that house and rent it out to strange people on a pension for longer.

 

[craigb]

i have paid two break fees one at 23k and the other at 48k, you see they are always holding your Nuts when you bank with them you need to work these sums into your equation when you invest, some how , you will either get used to these fees/charges or what ever they want to call them, or learn them throuigh some tough lessons like i did ?