A Melbourne woman is taking on a mortgage lender over claims of “unconscionable” high interest rates and “excessive” exit fees.
Emily Hamilton is taking RHG Mortgage Corporation (formerly RAMS Mortgage Corporation) to the Victorian Civil and Administrative Tribunal (VCAT) after the lender told her she would have to pay $12,000 to exit her home loan.
Ms Hamilton was keen to refinance to a more-competitive loan after RHG increased her variable interest rate well above Reserve Bank of Australia (RBA) rate rises, Consumer Action Law Centre (CALW) spokeswoman Nicole Rich said.
“After she entered into the loan in July last year, RAMS, later RHG, started raising her interest rate to a point where now, even after recent RBA rate decreases, her rate is sitting at 0.99 per cent higher than when she signed, while the official RBA rate is two per cent lower,” Ms Rich said.
She said Ms Hamilton considered switching loans, but was faced with an “excessive” early termination fee of more than $12,000.
Lodging papers against the lender with VCAT on Monday, Ms Rich said CALW would argue the early termination fee was unconscionable because it exceeded RHG’s reasonable costs arising from the early end to the loan.
It will also allege the interest rate rises on Ms Hamilton’s loan were unconscionable and unreasonable, given they advertised the loan would keep competitive rates.
Ms Rich said borrowers signed up to variable home loans knowing the lender could raise or lower the interest rate, but lenders had no right to make arbitrary or unfair changes.
“Our claim also asserts that RHG has engaged in misleading and deceptive conduct by representing that the interest rate under the loan would remain competitive and not exceed the rate on a market leading loan, when this has not been the reality.”
A spokesman for RHG said the lender could not comment on the action while it was before the tribunal.
Emily Hamilton is taking RHG Mortgage Corporation (formerly RAMS Mortgage Corporation) to the Victorian Civil and Administrative Tribunal (VCAT) after the lender told her she would have to pay $12,000 to exit her home loan.
Ms Hamilton was keen to refinance to a more-competitive loan after RHG increased her variable interest rate well above Reserve Bank of Australia (RBA) rate rises, Consumer Action Law Centre (CALW) spokeswoman Nicole Rich said.
“After she entered into the loan in July last year, RAMS, later RHG, started raising her interest rate to a point where now, even after recent RBA rate decreases, her rate is sitting at 0.99 per cent higher than when she signed, while the official RBA rate is two per cent lower,” Ms Rich said.
She said Ms Hamilton considered switching loans, but was faced with an “excessive” early termination fee of more than $12,000.
Lodging papers against the lender with VCAT on Monday, Ms Rich said CALW would argue the early termination fee was unconscionable because it exceeded RHG’s reasonable costs arising from the early end to the loan.
It will also allege the interest rate rises on Ms Hamilton’s loan were unconscionable and unreasonable, given they advertised the loan would keep competitive rates.
Ms Rich said borrowers signed up to variable home loans knowing the lender could raise or lower the interest rate, but lenders had no right to make arbitrary or unfair changes.
“Our claim also asserts that RHG has engaged in misleading and deceptive conduct by representing that the interest rate under the loan would remain competitive and not exceed the rate on a market leading loan, when this has not been the reality.”
A spokesman for RHG said the lender could not comment on the action while it was before the tribunal.
At the time I took it out, they were the only lender who'd finance us, so I didn't feel that I had any choice. Thankfully I now have the option to pay the $30K penalty and move on... 
