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Home loan – loan repayments miscalculated – loan unaffordable – negotiated settlement
Ms T and her partner received a very good offer to sell their home. Before accepting the offer they met with their banking consultant to see how much they could afford to borrow to buy a new house.
They were told by the bank that they could afford to buy a property up to $350,000 with the 10% deposit that they had and that their loan repayments would be $656 per fortnight. They then accepted the offer on their home and entered into a contract to buy a new property for $310,000.
To Ms T’s dismay, when she and her partner went in to sign the bank loan documents they were told that their repayments were in fact $1,005 per fortnight. When she complained, the bank offered to give Ms T a discount of 0.3% on their 5 year fixed-interest rate which would reduce the fortnightly loan repayments to $945.
Ms T was not happy with the bank’s offer and complained to me. As Ms T had shortly to settle the sale of her existing home and the purchase of the new home, a prompt resolution was required.
After further discussion and negotiation between Ms T, my investigator and the bank, an agreement was reached within two weeks of Ms T making her complaint to my office. It was agreed that the bank would allow Ms T to retain her capped rate loan of $150,000 that expired in June 2006 and would advance the additional money that she required to buy her new home ($130,000) for a period of six months on an interest-free basis. The bank also agreed to pay a contribution of $1,200 to Ms T’s legal costs, $500 towards valuation costs on the house and an ex gratia payment of $2,000 for the stress and inconvenience caused to Ms T and her partner as a result of the bank’s mistake.
The quick settlement was helped by the willingness of both Ms T and the bank to reach a settlement with the assistance of my investigator.