Just gotta love banks

From: Michael Croft

Here's one to tickle your fancy.

Last year I helped some friends develop a property, finance was secure by mortgage (housing loan with redraw) over a residential property value $400k and the new aquisition to develop at $350k ($890k developed).

So the development goes well and my friends pay the mortgage down to $0 but don't discharge the mortgage as they plan to repeat the process - funny, they liked the $155k gross profit for 9 months of little effort. They instructed the bank at the time of their intentions to reuse this facility.

The bank now says "because you paid the loan down to $0 you have to re-apply for the loan; if you had left $50 owing on the loan you wouldn't have to go through this process." So now my friends have to go through the whole circus of an application (assets, liabilities, income verification etc)for a loan they believed they had in place over which the bank already has a mortgage.

The point being - how bloody stupid an internal rule is that? I'm sure there are worse examples but, for paying the loan to $0 (doing the right thing) and not leaving $50 outstanding? And yes, nothing has changed on their application form except that they are about $120k wealthier thanks to the development. Oh and their net worth is some $4m with no other loans except two credit cards with zero balances!

The bank is one of the majors and I know all banks are equally as stupid but come on............

Michael Croft
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Reply: 1
From: KJL .

Nothing strange there. I moved from P&I to IO at a major, and they had me fill in all the forms, even though *absolutely* every piece of info, assets, liabilities, etc, was the same other than the type of loan.

I know there are several IT people on this forum - how difficult would it be to structure a system so that it filled in the boxes for you? and, even better, online? Is that too difficult?

The first bank that personalises my ATM interaction recognises me and my transactions will have my business for ever. Hi Kev, do you want to withdraw $200 like you do every Friday? And do you want a receipt like you always do? Here you go. Two presses and you're outta here! Might sound flippant, but it's just another sign that the focus is not on the customer.

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Reply: 2
From: Splinter Wood

Higher net worth individuals can usually deal directly with a professional banking rep (NAB Have them). They work for bank but act like you private broker. Save a lot of messing about and you can usually cut your deal over the phone once you are in bed with your banker...so to speak.

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