With Westpac - repayments did not go up - Why?

[ThomasAJ]

My MB is ROLF but I think he is on holidays.

Refinanced with WP Sep 2009 - Rocket Investment - 30yr PI (had to do PI for reasons that are irrelevant for this post).

The 16 Nov and 16 Dec repaymenst were at 5.1% (not fixed rate) which was the rate when refinanced.

I thought they should have gone up - what don't I understand?

Thanks

 

[ThomasAJ]

So is this...

1. Stupid question
2. All MBs on holidays
3. 1 & 2
4. other

 

[tobe]

4. Rolf is the best person to go to on this. Failing that, direct to your lender.

If it were me, I'd keep mum, and put the extra they were supposed to take into offset and make some money on theirs for a change until they realise their error and ask for it back.

 

[ThomasAJ]

Thanks tobe

so looks like their error...gotta be strange as computer would do the deduction automatically.

 

[Bradsdad]

As repayments are P & I Westpac will calculate repayments based on rate, balance & remaining term. No matter if you do it now or later the repayments will need to increase to ensure loan is paid off in time. If they overlooked it for quite some time then rate decreases may cancel this out but I personally wouldn't be risking this.

By any chance are you ahead in repayments on the loan? If so the extra you have paid off may have negated the need for your repayments to go up just yet. In saying this they should have sent out a letter stating what you new minimum repayments are (even if it's less than what you are paying).

I'd personally be contacting them now (unless the above applies) as further down the track the error may compound itself further and the need for a higher increase in repayments may occur. Even if surplus funds are sitting in your offset the need for repayment increase doesn't allow for this. The offset funds would only impact if you paid them direct to the loan which could minimise any increase needed. the funds however put in the loan may lose deductability either now or further down the track.


Regards
Steve

 

[Lynchy]

I have to change my repayments myself? I thought everyone did the same?

 

[jroth]

.

With St George IO they seem to leave the repayments the same for a month or 2 after interest rate rises, the actual interest charged goes up though - I thought it was weird on my account when my rate didnt change after a couple of rises but I realised my offset wasn't 'saving' me as much interest as it was before.

Maybe Westpac do something similar?

Banks are good at not undercharging!

 

[davo6253]

I am pretty sure it would be same as St George as previous poster said. They have to notify you of every repayment change in writing I believe so to save an extra monthly letter they are skipping a few months and updating the repayments then.

 

[ThomasAJ]

Have not received any rate/repayment changes letter.

I do have offset account and am 'ahead' as previous payment knocked off the principle quite a bit.

 

[Perth Investor]

I know with NAB for example they only adjust the P and I payments on the anniversary of the loan.

So the interest rate goes up, the amount of interest you pay is increasing, so your current payments aren't working as hard to pay off the principle. Then on the yearly anniversary of the loan, they adjust the repayment based on the new rate and the new term (i.e. from 30 years to 29 to 28 etc...)

So this could quite possibly not be an error, but just the way they do it. If rates keep going up and your anniversary is still some way off, the jump in payment could be a bit of a shock.

For an Interest Only loan the payments are obviously adjusted straight away because all you are paying is interest, so when the interest changes they just take more out of your account to pay it.

 

[Spectre]

Could depend on the date the loan settled, mix in interest is charged in arrears & when WBC passed along the rate rise. Probably look to next month for the increase.

 

[COLJP]

When I was with Homeside they only notified of increased payment requirements in a yearly review of the loan. With interest rate increases, it was up to us to contact them to find out what the new amount should be. They only sent out a letter advising repayment amount with the yearly review.

 

[crc_error]

sounds like another lame attempt from the banks to keep you in debt longer...

 

[pennyk]

Were you paying more than required?
Its possible your repayments are still covering the interest rate rises if you have set up repayments which are higher than the minimum amount.
Our "repayments" haven't changed in the past 2 years, with any of the interest rates, because we always pay more than required.
Pen

 

[LeeJ]

Were you paying more than required?
Its possible your repayments are still covering the interest rate rises if you have set up repayments which are higher than the minimum amount.
Our "repayments" haven't changed in the past 2 years, with any of the interest rates, because we always pay more than required.
Pen

No - the repayments were at the min. - but do have substantial money in offset account (about 40% of the loan outstanding - temporarily).

Rolf L is my MB and has "asked the question" at Westpac - so we'll wait and see.

 

[sheepdog]

If your money is offsetting the loan in question, does it make any difference if your repayments go up or not, unless of course you took the money out of your offset?

That's pretty much the only reason why I'm not bothered with the min repayment having lag when updating, as long as I don't spend the money I would have repaid.