Is this sneaky by the bank?

Y

Y33

Loan originally IO fixed. Due to expire so contact bank to find put what current IO fixed rate terms they will offer. Also asked about a few other things but not relevant to the IO fixed rate term. Loan finishes and I assumed (costly mistake) loan would automatically become IO variable. When checking accounts noticed that next payment due was substantially higher than last payment but interest rate is less. Contact bank to find out why and informed the loan has changed to PI variable and is no longer IO. Also found out that a letter was sent out informing me of the change but sent to a mailing address (old one not updated by bank) when all other accounts are registered to the POB. Lending manager wants to address this problem after I decide what way I want to go with the loan regarding term and rates.

What I find hard to understand is that I have always stressed that my loan is IO and this is the second expiry term.

Any MB possibly interested in picking up a client pm me with your option or idea for refinancing and I will provide more details but here are some basics. Looking to pay out around 800K in loans. Foreign income and OZ rental income. 5 properties available for refinancing from this lender but would prefer to have 3 properties unencumbered and loans split between 2 properties combined value over 1 million.

Open to ideas if you have something new or different to offer.
Time is of the essence.
 
Hi Y33

Yes lovely little trick that as soon as your interest only period is up the Banks switch you to P & I and oh the old mail address excuse is a good one.

As long as the securities value up you should be able to refinance them to an 80% lend (maybe more if you are happy to cop some LMI but probably not necessary).

Some lenders have introduced new little currency conversion tricks when assessing your serviceability but if all is equal then cant see too much of a problem.

Happy to answer any questions you have.
 
Y33,

I'm struggling to understand in exactly which part of your post that the bank has possibly been sneaky.....:confused:

1) It appears they are only following what is obviously written in your contracts........
2) Since when has a bank been responsible for keeping track of it's customers address.......isn't that your responsibility?

ciao

Nor
 
Hi Y33,

Yes, usually an Interest Only Term is for a Fixed amount of time and then it will convert back to P&I.

This is not necessarily a costly mistake as you will find you are paying the lesser interest as you thought and the extra amount is simply paying down your loan. The extra "principle" you are paying is still your money.

Although you may have stressed that you only want Interest Only, the loans are fixed into a computer generated system which honours the terms and conditions in your contract. It will always be up to you to keep an eye on your IO period.

Really I see it as beneficial to you, that you can check your bank's Fixed Interest Rates and IO Rates out and possibly refinance elsewhere if they don't suit you.

Especially as it seems you may have property that is Cross-Collateralised.

Nothing sneaky there, only the good ole banks doing their thing!

From a banks point of view, you need to pay off the loan some time.:rolleyes:

From an investor's point of view, down right nasty!:eek:

Personally, I would be steering clear of another cross-collateralisation and sourcing another bank for funds. Where possible I would be seperating the properties into seperate loans and releasing the hold your bank has over your whole portfolio.:)


Regards JO
 
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Y33 I wouldn't be at all surprised if they were being sneaky as I have something similar going on at the moment, which bank is this with?

I received a letter in November letting me know that my 3 year fixed was up and advising what the new repayments with PI would be and to contact them to arrange anything different. I phoned up to speak to someone about it and aswell as asking to stay interest only I asked about changing to the negotiated rate as this had a lower interest rate.

The girl said she would send out a form which arrived, was filled out and duly sent back. Sure enough when the loan changed it appeared on-line at the new negotiated percentage rate and I thought all was well. However after paying the next interest payment as shown on-line I received a phone call a few days later to say I was $600 behind on the account and when I asked why the girl didn't know but said she thought I must be behind with the interest. As we did have so much trouble last year this sounded plausible so I stumped up the extra $600 but then would you believe it exactly the same thing happened the following month.

This time when I rang I was taking no prisoners and demanded to know what was going on and after a bit of digging the girl told me I should be paying Principle and interest, the extra $600 was the principle component. I told her that I had made arrangements to remain interest only and she said there was no record of it and she would send out a form for me to fill out so I queried when my account would be amended as I had paid $600 too much so she said they would have to go back and listen to my telephone conversations to confirm that I was telling the truth basically! Therefore I adjusted the next payment myself so that I paid the interest less the $600 too much that they already had which then made it look as though I was $1200 behind.

Three weeks later no response yet back from the bank despite 2 more phone calls from me and several from their 'collections' dept who now think I am behind. The form that was to be sent has not arrived and last week I called a customer service person who was going to chase up someone to call me back but I probably wouldn't hear back for at least 10 days due to Easter according to her. Meanwhile on the 16th of the month I will be making my next interest payment and the account will show me as being $1800 behind - where will it all end we ask ourselves?

Just for the record this is with St George bank.
 
What hell, Sparky.

Sounds like the usual clerical rubbish from someone not talking to someone. Or as in most cases: SImply forgetting.

Importantly: What did the document you signed say?

Regards JO
 
One of our IO loans (original term 5 years) expires and we received the letter from the bank saying they would convert it to P&I loan. So, I contacted our bank manager and she said we had to fill out a "switching loan application" for IO for another 5 years. We did this and she promised to sort it out for us - we won't know if the "backoffice" will do it right or not for another 2 weeks, when the initial IO loan repayment expires. However, the bank manager said we had to pay $300 fee for this switching (?) but she would discount it by half ...
 
IO loans change to P&I at the end of the IO period. If you don't know this, you should take the time to understand the product you're getting into.

Not unexpectedly, bank's are taking a close look before agreeing to extend IO periods to ensure the borrower has some skin in the game.

Sparky, FWIW given you're recent experience I'm not sure deciding to pay less than the Bank requires whilst you're getting your communication issues sorted is a particularly sensible idea.
 
Yes I know but I'm afraid I got very angry after yet another call from India when the noddys in this country can't get back to me and I know I am in the right on this one which they will discover if and when they listen to the phone conversations.

My copy of the form I sent back says it is an Advantage package acknowledgement form, I suspect they should have sent another form aswell for the continuance of interest only, they said this could be for 15 years at the time. Fair enough not sending it first time around but what happened to the one that was promised 3 weeks ago?
 
Qlds007,
Richard will pm you.

Norwester,

When contracts were drawn it was noted at the time the loan was to become variable unless option to fixed was taken up.

You may missed the part that all mail is meant to go to the POB and not mailing address as overseas for extended period of times. The bank even said on the phone they don't know why it was sent to the old residential address as all other accounts and mail go to the POB. They had been informed which is why they knew to send other mail to POB for the last 5 years.

PB,

Same comment as Norwester. Currently looking for contract. Also I was on the phone within them before it expired about whether to fix for 3 or 5 years and no mentioned of it switching to variable or mention of a letter going out.

Josko,

Don't mind having paid a little extra off the Principle. The main concern is if I hadn't checked a few days before there would not have been enough funds in the account to cover the payment. Money is transferred to the loan a few days prior to bank withdrawal. Normally have at least 2 payments extra in there but didn't this tiome and would have been caught out.

Definitely don't like the idea of x-ing but it was a necessary evil at the time due to a stuff up from another (which) bank. The new lending manager has agreed to remove other properties from X as per original agreement depending on valuations and what properties stay with the loan.

Sparky,

Same as you. Originally I was dealing with the head honcho off the bank but he has now retired and it appears he hasn't put everything down in my file. I'm lucky in one aspect that the new lending manager is aware of the stuff ups made originally a few years ago when I first came across from the (which) bank. Another strong point is that the person who first referred me to the head honcho is one of the branches major customer.

TF,

The previous head honcho was meant to address this situation on the contract and notes were added. Also most of it was arranged by phone and then a short meeting as I was flying out of the country the same day. Not trying to make any excuses but the deals needed to be done and everything sorted out in a very short time. A lot of faith was put in the head honcho as I was referred to him directly and I must say he did look after a lot of things for me. Unfortunately their seems to be a few hiccups occurring now.

If the previous head honcho was still there I don't think any of this would have happened now. More of a case of old style boys club business now in the hands of rules are rules brigade.

The current lending manager appears willing to some extent to work things out but I'm not taking anything for granted and seeing what else is available.
 
That's the reason you now have a new "head honcho", as they all get switched around and put a flame underneath them to get moving and put an end to the funny business of mates rates & favours and boys clubs.
The only come back is "my contract states....blash , blah , blah".
The local bank manager, head honcho concept has been gone for ~15yrs now.
It's been mentioned in the forum last few mths, this is standard MO for banks.

My guess is that the will be the hot topic for the next couple yrs round here.
Many will learn exactly why banks are hated so much over 2009/10, and how good that "good debt" really is.
 
I can offer a better one :)

How about IO to Repayable in full once the fixed is over.

Homeside's fixed rate investment loans dont go to PI after the IO period, they are repayable in full. Been a while since I wrote one of those puppies, but my ears and wallet are still stinging, so learnt that lesson a long time ago.

ta
rolf
 
PB,

He retired. Probably more appropriate to call him state manager. To my understanding it was his style that saw most of the major players in the area switch to him. He was flexible enough to see the big picture so often missing from people in similar positions and was not just a number cruncher.

Rolf,

That would definitely hurt.
 
Yes Rolf, that was a doozy of a product. Had to refinance a couple from there are very short notice as clients didn't have it explained to them properly by their previous MB.
 
So todays update is that someone finally got back to me with all the usual apologies, however as someone mentioned earlier they can't switch me to interest only whilst I am in arrears (even though I don't think I am really) so I have just paid up to date and after switching me they will then request to have that backdated so that I might be able to get back the extra money that I shouldn't have paid in the first place. Not holding my breath, although I did advise her that we have recently sent up a relationship with St George and I have been recommending the local branch to purchasers which has resulted in business for them, obviously I feel less inclined to make recommendations if I can't get good service for myself!
 
Sparky,

Another update. Had a call this evening myself from a staff member (remember I'm o/s). They were very helpful and explained all the ins and outs including the switching fee to remain IO and not PI, which occurs with all loans of this nature.

Did they still charge you a fee or have you negotiated this?

It was explained to me that If you have an 'advantage package' I think that is what it is called there is no fee. Also found out that the original package I was on is no longer available and they now have this 'advantage package' with free credit cards etc. I asked if they noticed I already have credit cards they gave me and have never been used so no need for another one.

I'm hearing a lot of we will do this to fix the situation but no action or nothing concrete yet.
 
Yes well lets see what happens next, I'm not happy that having listened to the phone calls and established I wasn't making it up I still had to pay the principle that I wasn't supposed to have been paying just so that I can attempt to claim it back later!

How funny that this is the same bank looks as though the customer service fell into a hole. I am thinking that with all of the banking jobs disappearing but banks being so much busier that it can only get worse. I think they should be putting on lots of staff at the Ombudsmans office!
 
Y33

Advantage Package sounds like a nice St George Bank cross collateralised Pro pack. They are great in telling you if you want the lower rate we want you loan to be tied over all properties.

I can see why you want to refinance away from the Dragon and free up your securities.
 
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